Licence Appeal Tribunal
FILE: 7584/MVDA
CASE NAME: 7584 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 Registrations
2196596 Ontario Limited o/a All Car Sales and Leasing and John J. Scalia Applicants
-and-
Registrar, Motor Vehicle Dealers Act 2002 Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Kenneth W. Koprowski, Vice-Chair
APPEARANCES:
For the Applicants: Rodney Godard, Counsel
For the Respondent: Brian Osler, Counsel
Heard in Windsor April 11, 12, May 21, 2013
REASONS FOR DECISION AND ORDER
BACKGROUND
This is a hearing before the Licence Appeal Tribunal (the “Tribunal”) arising out of a Notice of Proposal issued by the Registrar, Motor Vehicle Dealers Act 2002 (the “Registrar” and the “Act” respectively). The Notice of Proposal dated August 3, 2012, proposed to revoke the registration of 2196596 Ontario Limited o/a All Car Sales and Leasing (“All Car”) as a motor vehicle dealer and the registration of John J. Scalia, as a salesperson under the Act, both Applicants hereinafter referred to, collectively, as “the Applicants.” The Applicants appealed to this Tribunal.
The Notice of Proposal also proposed to refuse the registration of Vincenzo Joseph Sacripanti (“Sacripanti”) as a salesperson under the Act. Sacripanti also appealed to this Tribunal. By Order of this Tribunal, released December 28, 2012, the appeal of the Applicants was ordered to be heard separately from the appeal of Sacripanti.
At the time of this hearing involving the Applicants, the appeal of Sacripanti had not yet been heard. It was adjourned, pending the outcome of the Applicants’ appeal.
John Scalia had been registered as a salesperson under the predecessor to the Act since April 2, 1985. On August 17, 2010, the Registrar consented to the registration of All Car as a motor vehicle dealer under the Act, subject to certain Terms and Conditions, found at Tab 1B of Exhibit #3. Mr. Scalia was the owner of All Car. On the same date, the Registrar also consented to the Terms and Conditions applying to Mr. Scalia’s registration as a salesperson. Mr. Scalia signed the Terms and Conditions on behalf of All Car and on his own behalf.
As a result of concerns that the Registrar had about Sacripanti, the Terms and Conditions contained terms that, among other things, prohibited Sacripanti’s involvement in All Car. At the commencement of this hearing, Counsel for the Registrar informed the Tribunal that the Registrar was particularly concerned that the Applicants had violated conditions 4 and 5 of the Terms and Conditions. Those conditions (in which the Applicants are referred to as “Registrants” and All Car is referred to as the “dealership”) read as follows:
The Registrants agree that Vincent Sacripanti shall have no involvement directly or indirectly in the financing or operation of the dealership.
The Registrants agree not to conduct business with Vincent Sacripanti (either directly or indirectly), or with any corporation owned or controlled by him, without the prior written consent of the Registrar.
Counsel for the Registrar acknowledged, in his final submissions, that the reference in paragraph 4 to the condition prohibiting Sacripanti from being involved in the financing of the dealership was not an issue in this appeal.
The Registrar’s position was that the Applicants breached the Terms and Conditions under which they were to carry on business, contrary to section 6(1)(f) of the Act. Accordingly, the Registrar concluded that the Applicants’ past conduct afforded reasonable grounds for belief that the Applicants will not carry on business in accordance with law and with honesty and integrity, contrary to sections 6(1)(a)(ii) and 6(1)(d)(iii) of the Act.
For their part, the Applicants denied that they breached any of the Terms and Conditions attached to their registrations.
Six witnesses testified on behalf of the Registrar. The Applicants did not testify and did not call any witnesses to testify on their behalf.
The essence of this case was the Applicants’ involvement with Sacripanti. The evidence summarized in this decision must be viewed in that context.
FINDINGS
Having heard the evidence and submissions, the Tribunal makes the following findings.
The past conduct of John Scalia does not afford reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty.
The past conduct of the officers or directors of All Car does not afford reasonable grounds for belief that its business will not be carried on in accordance with the law and with integrity and honesty.
The Applicants are not in breach of a condition or conditions of their registrations.
FACTS
Evidence of Consumer A
The first witness to testify on behalf of the Registrar was a customer of All Car, identified in this decision as Consumer A.
Consumer A purchased a truck from All Car on March 10, 2011, as evidenced by the Bill of Sale found at page 292 of Exhibit #3. He had stopped at the dealership because he saw the truck on the lot and considered buying it. He had never been at the dealership before and knew no one there. Mr. Scalia came out to talk to him and introduced himself as being new in the City. He talked to Mr. Scalia in his office. It was Mr. Scalia who prepared the paperwork. Sacripanti was not there on the first day Consumer A was at the lot.
Once he arranged his loan, Consumer A returned to the lot and traded in his automobile for the truck. It was at this second visit to the dealership that Mr. Scalia and Sacripanti showed him another truck at the rear of the lot, but Consumer A did not want to buy it. Sacripanti also showed him three other trucks that Sacripanti found on a computer website, but Consumer A did not want those, either.
Sacripanti then valued Consumer A’s trade-in at $4,000.00 but it was with Mr. Scalia that Consumer A discussed the trade-in amount. It was also with Mr. Scalia that Consumer A negotiated the price.
The third time Consumer A went to the dealership was after Sacripanti returned from a holiday. Consumer A had Sacripanti do some detailing on the truck and had him paint one of the fenders. It was on this visit that Consumer A was told that the truck he purchased had been in an accident previously and was damaged in the amount of about $10,000.00. He was shown the portion of a document found at page 294 of Exhibit #3, but he could not remember whether it was Mr. Scalia or Sacripanti who showed it to him. Mr. Scalia told him that he had forgotten to give him that information before the sale of the truck.
The Tribunal notes that the document at page 294 has a hand-written figure on it of 4025 under the heading, “Accident Damage Information,” but does not contain the figure of $10,000.00 that Consumer A was given.
At a later date, the engine light came on. Consumer A talked to Mr. Scalia about it, not Sacripanti.
Evidence of Consumer B
Another customer of All Car, identified in this decision as Consumer B, also testified on behalf of the Registrar.
The father of Consumer B specifically told her to speak to Sacripanti about buying a vehicle. The reason for the referral was that her father worked with Sacripanti’s relative and had done business with Sacripanti in the past. She started looking for a vehicle on the computer in June, 2011. At the end of that month, she first contacted Sacripanti and told him what she wanted. He told her that he would try to find the vehicle she wanted at an auction. He then told her by telephone that he found two vehicles and she told him which one she wanted.
Although she could not recall exactly, she stated that she talked to Sacripanti and went to the dealership more than once. The first time she saw the vehicle at the dealership, it was the wrong one but the correct one was quickly brought in. She believed that both Mr. Scalia and Sacripanti were present when she was shown the incorrect vehicle. However, she was certain when she testified that, whenever she was at the dealership, she dealt with both Mr. Scalia and Sacripanti.
Most of her communications about the vehicle were with Sacripanti, in accordance with her father’s instructions. All the paperwork was done by Mr. Scalia.
Before she purchased the vehicle, Sacripanti told her about a defective latch on one of the rear seats, but she never did anything about it. It was Sacripanti who showed her how the DVD player worked and where various features were found. She did not recall that anyone else at the dealership showed her anything about the vehicle. Sacripanti even picked the vehicle up two or three times at her place of work to do work on it.
She felt the vehicle was a good purchase. She went back “a couple of times,” to quote her testimony, to have it cleaned and to have a few things repaired.
On cross-examination, Consumer B confirmed that she knew of Sacripanti even before she went to the dealership because her father played baseball and golf with him and was a business partner with one of Sacripanti’s relatives. She went to All Car because her father told her to. While there, she dealt with both Mr. Scalia and Sacripanti. She dealt with Mr. Scalia on all financing matters. She also dealt with Mr. Scalia when he prepared the paperwork and when she signed it. She is pleased with the vehicle.
Evidence of Galynne Ethier
Ms. Ethier had been, as at the time of this hearing, an inspector with the Ontario Motor Vehicle Industry Council (“OMVIC”) for 13 years. OMVIC is the regulator of motor vehicle sales in Ontario and the organization that enforces the provisions of the Act. In that position, she conducts routine audits of registered dealers’ books and records. She performed an inspection of All Car on August 17, 2011. Her Inspection Report is found at Tab 28 of Exhibit #3. During the inspection, she met with Mr. Scalia and reviewed his records, including his financial records and his advertising.
Ms. Ethier stated that All Car was selling about five to six vehicles a month, having obtained them by auction. All Car was selling some vehicles to an American dealer in the State of Michigan.. Mr. Scalia told her that Sacripanti was working as a consultant at All Car. When Ms. Ethier reminded him of the Terms and Conditions, he responded that Sacripanti placed prices on the vehicles and cleaned them, but was not involved with selling them. She told Mr. Scalia that Sacripanti was not to be a consultant. She stated that Mr. Scalia changed his response and stated that Sacripanti was not a consultant but helped when needed.
Mr. Scalia then told her that he did not know what OMVIC’s issues were concerning Sacripanti. There was no evidence that Ms. Ethier disclosed that information to him. He also stated that he wanted to have Sacripanti licensed to sell vehicles. He was open and up-front with her about that, but Ms. Ethier reminded him that that could not happen because of the existing Terms and Conditions.
Her Inspection findings are found at page 228 of Exhibit #3. In them, she listed three matters of concern. Two related to completion of trade-in documents and disclosure issues, neither of which were in issue at this hearing. The third related to Mr. Scalia’s compliance with Terms and Conditions of his and All Car’s registrations, including the clauses concerning Sacripanti. Nothing further was written about that matter in the Inspection Report.
Ms. Ethier also contacted 7 consumers who had purchased vehicles at All Car. She made summaries of her discussions, filed as Exhibits #4 to #10.
Of the 7 contacts, one did not respond (Exhibit #10). Two others (Exhibits #4 and #6) were discussions with Consumer A and Consumer B, respectively, both of whom testified at this hearing. Ms. Ethier did not recall if Consumer B told her that she had gone specifically to see Sacripanti at All Car at the suggestion of her father.
Of the remaining four summaries, two discussions with consumers (Exhibits #8 and #9) resulted in Ms. Ethier having no concerns about Sacripanti’s involvement with All Car because those consumers dealt with only Mr. Scalia. One summary (Exhibit #5) revealed that the consumer dealt mainly with Mr. Scalia but Sacripanti had gone to auctions to look for a vehicle. The Tribunal notes that subsequent evidence, especially the evidence of W.C., the general manager of the vehicle dealership identified in this decision as BCM, confirmed that Sacripanti’s job was to look for vehicles at auctions while working for BCM and was not involved in the retail sales of vehicles at BCM.
A further summary (Exhibit #7) recorded that the consumer dealt with Sacripanti. The Tribunal notes that, although the fact that the summary was made is evidence, the contents are hearsay, inasmuch as that consumer did not testify at this hearing. The Tribunal places little weight on the contents of Exhibit #7.
Ms. Ethier did not attempt to contact any other consumers who dealt with All Car.
Ms. Ethier stated that, during her inspection, she was also concerned with the portion of a Car Proof report, found at page 294 of Exhibit #3. She saw that it was signed by Consumer A,. The damage information was hand-written, but should have been typed in. No Vehicle Identification Number (“VIN”) was noted on that page. She matched it to Consumer A’s Bill of Sale found at the previous page 292. She compared that to the Car Proof report found at pages 312 to 317 in Exhibit #3. On page 315, she noted that the damage amount of $10,416.00 was typed in. She relied on those documents to confirm her finding that All Car’s disclosure was not adequate.
However, that testimony was totally discredited on her cross-examination. Although she photocopied page 294 from the All Car file, that was only one page of the 8 pages in the Car Proof report. Ms. Ethier explained that she photocopied only what she considered to be the applicable page. She was then shown the complete All Car file relating to the sale of the truck to Consumer A. In the file was a Car Proof report, a copy of which was filed as Exhibit #11. In that report is found the same page 6 of 8 that is found at page 294 and signed by Consumer A (the page that Ms. Ethier said should have had the damage amount typed in and not hand-written). But, that Car Proof report, Exhibit #11, was a report about a Chrysler Sebring motor vehicle and not the truck that Consumer A purchased.
Furthermore, there was a further Car Proof report in All Car’s file. A copy of that report was filed as Exhibit #12. That report, acknowledged Ms. Ethier, does indeed refer to the truck purchased by Consumer A. On page 6 of the report (also signed by Consumer A) is the damage amount of $10,416.00 and the amount is typed in, not hand-written, as she stated should be done.
On having been shown Exhibits #11 and #12, Ms. Ethier admitted that her previous evidence that the hand-written damage amount found on page 294 of Exhibit #3 that she believed referred to the truck purchased by Consumer A was a result of her being on the wrong page of the Car Proof report. She also admitted that, with Consumer A having signed Exhibit #12 on page 6 of the report, the contents of the report were consistent with what Consumer A told her about the damage amount. Finally, Ms. Ethier admitted that her testimony that page 294 referred to the truck purchased by Consumer A was wrong.
On further cross-examination, Ms. Ethier admitted that she knew that All Car sold vehicles mainly wholesale and did not have many retail customers. When presented with the Garage Register at this hearing, she confirmed that, in the year before her inspection in August, 2011, All Car sold to only ten retail customers since being registered under the Act in August, 2010. She acknowledged that that fact confirmed that All Car sold mostly to wholesalers. She stated as much in her summary found at Tab 28 of Exhibit #3, and particularly at page 226. She also acknowledged in her summary that the selling of vehicles wholesale took place outside Ontario. She acknowledged that the Act protects customers only in Ontario.
Ms. Ethier also admitted that she knew that Sacripanti was registered as a salesperson with the dealership, BCM. Other than that, in August, 2011 (the time of her inspection), she knew only that Sacripanti’s previous dealership had gone bankrupt, resulting in the termination of his registration as a salesperson, but that he was subsequently registered with BCM. She had no idea why the Terms and Conditions relating to Sacripanti were imposed on the Applicants. She also knew, from what Mr. Scalia told her, that BCM authorized Sacripanti to clean vehicles at All Car’s building, but she did not bother to corroborate that with BCM. Nevertheless, she, therefore, knew that there was a valid reason that Sacripanti was at All Car’s building.
She further admitted that Mr. Scalia told her that Sacripanti was not on All Car’s payroll and was not paid for his help. When Mr. Scalia told her that he wanted Sacripanti to be registered as a salesperson with All Car, Mr. Scalia did not hide anything from her about that. Although she told him that Sacripanti was to have nothing to do within Mr. Scalia’s business (see her summary, page 226), she admitted that her wording was incorrect and was not the wording in the Terms and Conditions. Condition 4 of the Terms and Conditions states: “The Registrants agree that Vincent Sacripanti shall have no involvement directly or indirectly in the financing or operation of the dealership.”
As a result of her admissions elicited on cross-examination, the Tribunal finds that Ms. Ethier’s interpretation of the Terms and Conditions went well beyond their proper reach. The ramifications of her interpretation went far beyond the interpretation that the Deputy Registrar gave in her evidence.
Evidence of Steven Bruce Spencer
Mr. Spencer had been, as at the time of this hearing, an investigator for over two years with OMVIC. Before his work for OMVIC, he was a police officer for over 34 years in a London working for ten of those years as an investigator in the auto theft and arson unit.
As an OMVIC investigator, he receives assignments to investigate complaints about dealers and salespersons and consumer complaints about the purchase of vehicles.
He became involved with All Car when, in December, 2011, he investigated a complaint by another auto dealer, BCM. Sacripanti had been registered as a salesperson under the Act on December 14, 2010 and was employed by BCM until dismissed on May 20, 2011. The complaint by BCM concerned Sacripanti’s activities in relation to his dealings on behalf of an American dealer and this locating vehicles in Canada, purchasing them through BCM and then shipping them to the American dealership. That activity was, in itself, proper. However, it appeared that Sacripanti, while registered as a salesperson with BCM, had brought some of those vehicles to a cleaning bay that Sacripanti operated in the same building where All Car was also located. Sacripanti did not have an office at BCM.
Subsequent testimony from W. C., the general manager at BCM, revealed that, although Sacripanti purchased vehicles while registered as a salesperson with BCM, the vehicles were for subsequent transfer to the American dealership. The American dealership paid BCM for the vehicles, but, before they were shipped to the United States, Sacripanti would clean them at his business and would sometimes keep those vehicles on the All Car lot. BCM objected to this practice.
In the end, neither BCM nor the American dealership pursued the matter with OMVIC.
All Car was not involved. There was no complaint with All Car. However, Mr. Spencer took it upon himself to go to All Car on December 16, 2011, (by which time Sacripanti had been dismissed by BCM) and related (presumably to Mr. Scalia) the complaint against Sacripanti. Mr. Spencer testified that he told Mr. Scalia that it was not good for a dealer (All Car) to have a dismissed employee on its premises. Mr. Spencer then closed his investigation. Mr. Spencer never spoke to Sacripanti during this investigation.
Furthermore, Mr. Spencer ascertained from W.C. that BCM legitimately purchased vehicles by auction through Sacripanti and sold the vehicles to the dealer in the United States and to other U.S. wholesalers. He also confirmed that W.C. told him that the purchasers in the United States wanted Sacripanti to do the detailing on the vehicles before he shipped them..
Subsequently, Mr. Spencer was asked to perform another investigation in February, 2012. Based on the notes of the OMVIC inspector, Ms. Ethier, Mr. Spencer was to investigate the purchase by four consumers of vehicles from All Car but who were reported in the inspector’s notes to have said that they dealt with Sacripanti in the purchase of those vehicles. The Registrar was concerned that such involvement by Sacripanti was a breach of the Terms and Conditions that Mr. Scalia and All Car had agreed to in August, 2010.
Counsel for the Applicants acknowledged that Mr. Spencer took the statements of those whom he interviewed, found at Tabs 50A, B, C and D in Exhibit #3. Mr. Spencer’s handwritten notes of those interviews are found at Tab 50G of Exhibit #3. Mr. Spencer spoke to the four consumers, including Consumer A and Consumer B, who testified at this hearing.
When he spoke to the consumers, Mr. Spencer showed them the Bills of Sale relating to their purchases, but nothing else. After he interviewed them, he had no further contact with them until he served them each with a summons to testify at this hearing.
On cross-examination, Mr. Spencer confirmed that, from reading the inspector’s notes and reading the consumer questionnaires, he believed that Sacripanti was involved with the motor vehicles at All Car. He also confirmed that he had previously told Mr. Scalia, at the end of his investigation in December, 2011, that he did not think that Sacripanti should be on Mr. Scalia’s premises. The Tribunal notes that this opinion conflicts with the evidence of Ms. South, who denied that the Terms and Conditions prohibited Sacripanti from being on All Car’s premises. While Mr. Spencer was interviewing Mr. Scalia, Mr. Scalia showed Mr. Spencer the detailing area where Sacripanti did his work. Although Mr. Spencer told Mr. Scalia not to have Sacripanti there, Mr. Spencer acknowledged that the dealer in the United States with whom Sacripanti was doing business told Mr. Spencer that he knew that Sacripanti was detailing vehicles while he was still a licensed salesperson and was doing that work in the building where All Car was also located. The All Car dealership and Sacripanti’s business were in the same building. Further, Mr. Scalia told Mr. Spencer that Sacripanti’s office was separate from his.
Mr. Spencer admitted that there is nothing in the Terms and Conditions that stipulated where Sacripanti’s detailing business was to be done. However, after he completed his investigation, no more vehicles went to the All Car lot while waiting to be detailed.
Regarding the interviews with the consumers, Mr. Spencer admitted that he made his own notes, but did not have the consumers sign them and did not have them confirm the accuracy of his notes.
Although Mr. Spencer’s handwritten notes at Tab 50 G of Exhibit #3 indicate that he conducted the interviews on February 20, 2012, all the summaries of the interviews of the four consumers (Tabs A, B, C and D) show that he interviewed them on February 19, 2012. His notes also referred to “Vince Scalia” which is an incorrect combination of Sacripanti’s first name and Mr. Scalia’s last name. These discrepancies do serve to cast some doubt on the accuracy of Mr. Spencer’s summaries.
With regard to the notes of his interview of one of the consumers, found at page 400 of Exhibit #3, Mr. Spencer recorded that the consumer dealt with both Mr. Scalia and Sacripanti, but that all the paperwork for the purchase of a truck was done by Scalia. The consumer also was told that it was Sacripanti’s nephew who had traded in the truck.
Concerning the truck purchased by Consumer A, Mr. Spencer admitted that he had not been told that the vehicle had been previously owned by BCM. Counsel for the Applicants then showed Mr. Spencer the Wholesale Buyer Agreement found at page 393 of Exhibit #3. Mr. Spencer stated that he did not recall looking at that document, but it should have been in the inspector’s report. The document showed that the vehicle that had the same VIN as the truck purchased by Consumer A had, in fact, been owned by BCM but was transferred to All Car on February 28, 2011. Subsequent testimony from W.C. confirmed that the document had been signed by the sales manager at BCM.
The evidence therefore disclosed that the vehicle was purchased properly by Sacripanti while he was still registered as a salesperson to BCM and that BCM allowed Sacripanti to do the detailing on the vehicle in the building in which All Car was also located. Mr. Spencer presumed that such an arrangement was acceptable to BCM.
In addition, Mr. Spencer acknowledged that Consumer A purchased the truck on March 10, 2011,at which time Sacripanti was still registered as a salesperson for BCM under the Act
Evidence of Mary Jane South
Ms. South has been the Deputy Registrar of OMVIC since 1997. She oversees the registration of motor vehicle dealerships and salespersons under the Act, which she described as a public protection statute.
She stated that condition number 5 of the Terms and Conditions, found at Tab 1B of Exhibit #3, was particularly important, as it restricted All Car and Mr. Scalia from conducting business with Sacripanti. It was the alleged breach of that condition that caused the Registrar to issue this Notice of Proposal. Ms. South reviewed OMVIC’s history with Sacripanti to explain why the Terms and Conditions, especially condition number 5, were imposed. Although the Tribunal does not consider it necessary to set out all the details of that history, nevertheless, it is useful to review chronologically the relevant matters that caused concern to OMVIC and that led OMVIC to impose the Terms and Conditions on the registrations of All Car and Mr. Scalia.
She first referred to a decision of the Ontario Commercial Registration Appeal Tribunal, a predecessor of the current Tribunal. That decision was released on September 28, 1999.and included at Tab 1A of Exhibit #3. The decision involved a Notice of Proposal to revoke the registration of Sacripanti as a salesperson under the Motor Vehicle Dealers Act, the predecessor of the current Act, as a result of his alleged dishonesty. The Tribunal ordered the Registrar not to carry out his proposal. Instead, the Tribunal ordered the Registrar to revoke Sacripanti’s registration only if Sacripanti did not abide by certain conditions for a further period of two years. Ms. South explained that the Tribunal made that decision because no consumers were harmed by Sacripanti’s actions. There was no evidence before this Tribunal that Sacripanti breached those conditions.
The Tribunal notes that, in the current appeal as well, there was no evidence that any consumer was harmed.
Subsequently, Sacripanti operated his own dealership. It was placed in receivership on October 3, 2008 (Tab 7, Exhibit #3), and was declared bankrupt on March 20, 2009 (Tab 8, Exhibit #3). As a result, the registrations of Sacripanti as a salesperson and of his dealership as a motor vehicle dealer were terminated automatically. There were also unpaid claims to the compensation fund under the Act. Sacripanti was not a registered salesperson when All Car was registered as a dealership under the Act in August, 2010.
From the Ministry of Consumer and Commercial Relations, Companies Branch, Ms. South referred the Tribunal to records of Mr. Scalia’s numbered company, operating as All Car, and found at Tab 4 of Exhibit #3. The records were correct as of September 12, 2012. The records show that Mr. Scalia is the sole director and officer of the numbered company, but the address of the registered office is shown as Sacripanti’s address. The company was incorporated on January 28, 2009. The Tribunal notes that the corporate records do not show that Sacripanti was a director, officer or shareholder. The Tribunal also notes that the date of incorporation of the numbered company (July, 2008) was well before the Terms and Conditions were imposed on All Car and Mr. Scalia (August, 2010). The fact that the address of the registered office in 2008 was that of Sacripanti was not, for the purposes of this appeal, one of the grounds alleged to be a violation of Terms and Conditions that were imposed two years later.
Similarly, Ms. South referred to a copy of a letter from Canada Revenue Agency (“CRA”) dated February 2, 2009. By the letter, found at Tab 18, Exhibit #3, a business number was assigned to the numbered company. Mr. Sacripanti is shown in the form that accompanied the letter as an owner/partner of the numbered company. Again, the Tribunal notes that the date of the letter and the assignment of the business number pre-dated the imposition of the Terms and Conditions with which this appeal is concerned.
In March, 2009, Mr. Scalia filed an application on behalf of All Car for registration as a dealership under the Act. The application form shows Mr. Scalia to be the sole officer and director and lists Sacripanti’s three sons as shareholders, but not Sacripanti himself. Ms. South acknowledged that Sacripanti’s sons were not included in the Terms and Conditions imposed on All Car. She also acknowledged that a follow-up letter from OMVIC, dated April 4, 2009 (Tab 16 Exhibit #3) does not object to Sacripanti’s children being shareholders but, instead, seeks additional information about them before OMVIC would proceed with Mr. Scalia’s application. When All Car was eventually registered under the Act, Sacripanti’s children had been removed as shareholders.
The next month, April, 2009, OMVIC received yet anther application on behalf of All Car to be registered as a dealership under the Act. This time, the application form was signed by Sacripanti (Tab 17, Exhibit #3). He listed Mr. Scalia as Vice-President and Secretary. As of April, 2009, the Terms and Conditions that are the subject of this appeal did not yet exist, but OMVIC was concerned that, within a period of one month, it received two applications, one in March and the other in April, to register All Car under the Act, from two different persons.
At Tab 19, Exhibit #3, there is a summary of a telephone conversation on May 4, 2009, between Mr. Scalia and a representative of OMVIC who asked him about Sacripanti’s proposed involvement with All Car. Mr. Scalia indicated that Sacripanti would be involved only as a salesperson at the dealership. It must be remembered that, as at this time, the evidence is clear that Mr. Scalia did not know of the concerns that OMVIC had with Sacripanti, nor was he ever told what the concerns were.
In December of 2009, a judgment was granted against Sacripanti in his personal capacity in favour of a bank in the amount of $3,505,791.89. The Registrar became aware of this judgment only in 2012, when Sacripanti applied to be registered as a salesperson with All Car.
Before Sacripanti applied to be registered as a salesperson with All Car, he applied on July 7, 2010 to be registered with the dealership BCM. In the application form, Sacripanti stated that he did not have any outstanding judgments, despite the fact that the judgment of December, 2009, was still outstanding. He also denied that he had declared bankruptcy, despite the bankruptcy proceedings in 2009. However, not knowing about these two matters at the time, the Registrar registered Sacripanti as a salesperson with BCM on December 14, 2010, on terms and conditions (Tab 13, Exhibit #3).
Considering the foregoing background involving Sacripanti, the Registrar, in granting registration to All Car and to Mr. Scalia in August, 2010, imposed Terms and Conditions restricting their involvement with Sacripanti. Ms. South stated that all the previous issues involving Sacripanti and he Applicants were, therefore, resolved with the signing of the Terms and Conditions in August, 2010.
Subsequently, BCM cancelled Sacripanti’s employment with BCM by Cancellation Notice, dated May 20, 2011, found at Tab 14 of Exhibit #3. The dealership alleged that he was involved in stealing. Ms. South stated that part of BCM’s concerns related to Sacripanti’s suspected dealings at All Car.
Ms. Ethier’s inspection and her report were then made on August 17, 2011.
On September 13, 2011, Sacripanti filed a document described as “Salesperson Change Notice” with OMVIC, although Ms. South stated that the request was actually for reinstatement as a salesperson (Tab 31, Exhibit #3). The dealer with whom Sacripanti wished to be registered was All Car. Shortly afterwards, Mr. Scalia sent a letter to OMVIC, dated September 30, 2011 (Tab 35, Exhibit #3). In the letter, Mr. Scalia asked that condition 5 of the Terms and Conditions be removed because he wanted to hire Sacripanti as a salesperson. The matter was referred to Ms. South. She refused Mr. Scalia’s request, based largely on the results of the Inspection Report. However, by e-mail dated October 11, 2011 (Tab 37, Exhibit #3), Mr. Scalia stated that he did not understand what concerns OMVIC had with the Inspection Report.
It was then, October 11, 2011, that Ms. South spoke to Mr. Scalia by telephone and made a summary of her discussion (Tab 38, Exhibit #3). She recorded that she informed Mr. Scalia that Sacripanti would not be registered as a salesperson unless significant hurdles were cleared, but she did not tell Mr. Scalia what those hurdles were. Also during that conversation, Mr. Scalia freely admitted that Sacripanti was doing automobile clean-ups at his building, but was doing them for another dealership, BCM.
Ms. South’s summary goes on to say that Mr. Scalia then acknowledged that, because of Ms. South’s response, he no longer wanted Sacripanti to have anything to do with his dealership.
On November 1, 2011, Sacripanti filed an application to be registered as a salesperson under the Act with All Car (Tab 44, Exhibit #3). OMVIC did not allow the registration. On January 24, 2012, Ms. South met with Sacripanti and explained the concerns that OMVIC had about him. During that discussion, Sacripanti explained to Ms. South (page 282, Exhibit #3) that he had no involvement with All Car. He confirmed that the numbered company was his at first, but he transferred it to Mr. Scalia. He also denied that he dealt with All Car’s customers. His only involvement with All Car’s customers was to clean the vehicles and explain various things about the vehicle to the purchaser. Otherwise, he took any information from them and passed it on to Mr. Scalia.
Ms. South considered that the information that Sacripanti gave to her during their discussion on January 24 and the information from Mr. Spencer’s interview of All Car’s customers amounted to sufficient involvement with All Car by Sacripanti to be a breach of the Terms and Conditions, especially conditions 4 and 5.
On cross-examination, Ms. South acknowledged that the prohibition against Sacripanti’s involvement in All Car was not absolute, inasmuch as All Car could deal with Sacripanti with the consent of the Registrar.
Further, she admitted that she never told Mr. Scalia the details of OMVIC’s concerns with Sacripanti. She merely stated, during her telephone discussion with Mr. Scalia on October 11, 2011, that there were concerns.
Ms. South acknowledged that the Registrar’s role was to protect the public interest. She stated that revoking the licences of the Applicants in this matter was in the public interest because the Registrar was dealing with compliance with Terms and Conditions, the breach of which justified revocation. The Tribunal notes, as stated earlier, that there was no evidence at this hearing that indicated that any consumer was at risk at any time.
Ms. South also confirmed that, when Mr. Scalia filed his application for business registration of All Car (Tab 15, Exhibit #3), on March 24, 2009, there was no evidence that OMVIC had problems with Sacripanti and there was no indication that Scalia knew of any of Sacripanti’s problems. OMVIC did know, however, that, in 2008, Sacripanti’s business was closed. OMVIC did not inform Mr. Scalia that such a matter created a problem with Sacripanti when Mr. Scalia filed his application nor when he talked to an OMVIC representative afterwards, on May 4, 2009 (Tab 19, Exhibit #3). Mr. Scalia was candid with the representative when he told her that Sacripanti would be a salesperson and Sacripanti’s sons would be the shareholders. He did not attempt to deceive.
OMVIC’s concerns arose only when Sacripanti sent in the subsequent application for business registration, also for All Car, on April 23, 2009.
Ultimately, All Car was registered as a dealer under the Act in August, 2010. Mr. Scalia was the sole owner and was registered as a salesperson subject to the same Terms and Conditions that applied to the dealership.
Concerning Mr. Scalia’s history with OMVIC, Ms. South confirmed that OMVIC had never had any issues with him since he had been registered as a salesperson in 1985. When All Car became registered, Mr. Scalia opened his dealership in August, 2010, with an unblemished record. There was nothing in writing to explain to Mr. Scalia why the Terms and Conditions were necessary.
After All Car and Mr. Scalia were registered in August, 2010, Sacripanti was registered as a salesperson on December 14, 2010, with the dealership, BCM, and on conditions (Tab 13, Exhibit #3). The terms and conditions were not communicated to Mr. Scalia. Sacripanti was registered only from December 14, 2010, until May 20, 2011, when BCM informed OMVIC that he was no longer working there. Nevertheless, while Sacripanti was licensed, Ms. South agreed that he was eligible to have access to a computer to search for vehicles and could talk to customers of the dealership with which he was registered.
Ms. South further confirmed, in reviewing her summary of the telephone discussion with Mr. Scalia on October 11, 2011, that it was not correct to say that Sacripanti’s detailing of automobiles at All Car was a breach of the Terms and Conditions. In addition, she also stated that it was not correct to say that Sacripanti could not be on All Car’s property or inside the building because the Terms and Conditions did not go that far. That evidence is in conflict with the evidence of Mr. Spencer and with that of Ms. Ethier. Furthermore, Ms. South also admitted that, during her telephone conversation with Mr. Scalia on October 11, 2011, she stated that it was “OK,” to quote from her summary, that there were two occasions where Sacripanti referred relatives to All Car, when it was Mr. Scalia who completed the transactions.
Evidence of W.C.
W.C. had been the general manager of BCM since 2003. He had been in the automobile business for 24 years. He confirmed that BCM was a retail automobile dealership, dealing in new and used vehicles since the 1950’s.
He knew Sacripanti when Sacripanti worked at BCM as a registered salesperson. . W.C. subsequently cancelled Sacripanti’s licence on May 20, 2011 for reasons that are not relevant to the Tribunal’s decision in this appeal.
W.C. described the work that Sacripanti did for BCM. He would buy vehicles at auction or at other dealers and then ship them to a dealer in the United States. The shipper picked up the vehicles at Sacripanti’s shop. He could also do his work by searching for vehicles on the computer. Once the vehicles were shipped to the United Sates, Sacripanti would sell the vehicles in that country as the representative of the dealer there. He shared the profits with the American dealer and BCM received a flat fee for passing the vehicles through its dealership.
W.C. also confirmed that Sacripanti cleaned the vehicles he purchased, washed, shampooed, buffed and polished them. Sacripanti had no involvement whatsoever with retail sales at BCM, just with the wholesale dealings. He was not at BCM very often and did not have an office there.
At first, Sacripanti shipped the vehicles to the United States after he purchased them but then decided to detail them himself at the building where All Car was located so that he could save some money. The building where he set up his detailing business was not far down the street from BCM.
When the vehicles were detailed, they were owned by either BCM or by the American dealership. W.C. did not even consider that Sacripanti was doing work for BCM at his location. Instead, W.C. considered that Sacripanti was doing the work for the American dealer because they were the two parties who shared the profits. However, W.C. stated that, after a while, the vehicles that Sacripanti bought and then detailed appeared to be on display for sale at the All Car lot. After W.C. complained about that, the vehicles were then kept at BCM’s lot.
On cross-examination, W.C. admitted that he knew that Sacripanti was detailing the vehicles on Mr. Scalia’s property. He also knew that the vehicles were to be sold to the American dealership and that BCM had nothing to do with that. He also admitted that Sacripanti was licensed to sell to retail customers and to other dealers such as All Car. He was aware that Sacripanti sold vehicles to All Car, as evidenced by the Wholesale Buyers Agreements found at Tab 50G of Exhibit #3. W.C. himself signed the Agreement dated April 26, 2011, found at page 397 of Exhibit #3, so that, as of that date, he knew that Sacripanti was selling cars to All Car and had no difficulties with that. He further acknowledged that the transfers were done in the ordinary course of business inasmuch as Sacripanti was authorized to sell the vehicles to All Car on behalf of BCM. He agreed that Sacripanti, in doing so, was just doing his job.
Concerning the sale of the truck to Consumer A, W.C. agreed that there was nothing wrong with that transaction.
He further admitted that he did not care where Sacripanti found the vehicles, as long as he bought them and then sold them. W.C. made no complaints to OMVIC about Sacripanti. He understood that Sacripanti did things properly. After buying the vehicles, it was normal for Sacripanti to take the vehicles to the All Car building to do the detailing. Nor was it surprising to W.C. that Mr. Scalia was trying to sell the vehicles to customers, since Mr. Scalia did not know what the arrangement was between Sacripanti and BCM.
Furthermore, once the American dealership paid BCM for the vehicles, W.C. considered the vehicles to be those of that dealership. Title was still in the name of BCM only because title could not properly be transferred to the American dealership until the vehicle had been shipped to the United States. W.C candidly admitted that he had no idea what arrangement Sacripanti had with the American dealer after that dealer paid BCM for the vehicles. It was no surprise to W.C. that some vehicles would be sold to Mr. Scalia. BCM had no arrangement with the American dealer that would prevent Sacripanti from selling the vehicles to Mr. Scalia, which W.C. knew was happening. He authorized Sacripanti to do that. It was only because the paper title to the vehicles was still in BCM’s name that caused BCM to have the vehicles kept on its lot until Sacripanti did his detailing work on them.
In response to questioning from the Tribunal, W.C. confirmed that Sacripanti purchased the vehicles, not to have BCM sell them, but so that Sacripanti could sell them to the American dealership or to other dealers.
THE LAW
The Act states in part as follows:
Prohibition
4.(1) No person shall,
(a) act as a motor vehicle dealer unless the person is registered as a motor vehicle dealer under this Act; or
(b) act as a salesperson unless he or she is registered as a salesperson.
Name and place of business
(2) A motor vehicle dealer shall not,
(a) carry on business in a name other than the name in which the motor vehicle dealer is registered; or
(b) invite the public to deal in a place other than the place that is authorized in the registration of the motor vehicle dealer.
Unregistered salesperson
(3) A motor vehicle dealer shall not retain the services of a salesperson unless the salesperson is registered in that capacity.
Supply to unregistered person
(4) A motor vehicle dealer shall not supply motor vehicles to another motor vehicle dealer for the purpose of trading in motor vehicles unless the other motor vehicle dealer is registered in that capacity.
Salespersons
(5) A salesperson shall not trade a motor vehicle on behalf of a motor vehicle dealer unless the salesperson is registered to that dealer.
Regarding the right to registration, the Act states:
Registration
- (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,
(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
(d) the applicant is a corporation and,
(iii) the past conduct of its officers or directors or of an interested person in respect of its officers or directors or of an interested person in respect of the corporation affords reasonable grounds for belief that its business will not be carried on in accordance with the law and with integrity and honesty, or
(f) the applicant is in breach of a condition of the registration; or
Refusal to register, etc.
- (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.
- (1) The registrar shall notify an applicant or registrant in writing if he or she proposes to,
(a) refuse under subsection 8 (1) to grant or renew a registration;
(b) suspend or revoke a registration; or
(c) apply conditions to a registration or renewal to which the applicant or registrant has not consented.
Content of notice
(2) The notice of proposal shall set out the reasons for the proposed action and shall state that the applicant or registrant is entitled to a hearing by the Tribunal if the applicant or registrant mails or delivers, within 15 days after service of the notice, a written request for a hearing to the registrar and to the Tribunal.
ANALYSIS AND APPLICATION OF LAW TO FACTS
The Registrar’s Position
The Registrar relied on section 6(1)(a)(ii) of the Act in submitting that Mr. Scalia’s past conduct afforded reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty.
Secondly, the Registrar relied on section 6(1)(d)(iii) of the Act in submitting that the past conduct of Mr. Scalia, as an officer and director of All Car, afforded reasonable grounds for belief that the business of All Car will not be carried on in accordance with the law and with integrity and honesty.
Finally, the Registrar submitted that the Applicants were in breach of a condition of registration, contrary to section 6(1)(f) of the Act in that they had permitted Sacripanti to be involved in the Applicants’ business. Such involvement was a breach of conditions 4 and 5 of the Terms and Conditions imposed in August, 2010, when the Applicants were registered subject to those Terms and Conditions.
The Registrar set out his position in relation to the five following aspects of the evidence
1. All Car advertised on the internet vehicles that Sacripanti was detailing.
At the outset, the Tribunal rejects this submission. There was no admissible evidence to support that contention. At most, W.C. was vague about the matter. His evidence was only speculation and, therefore, the Tribunal places no weight on it.
- The sale of the vehicle to Consumer A.
The Registrar relied on Ms. Ethier’s Inspection Report dated August 17, 2011. The Registrar submitted that four of the seven customers that she contacted had dealings with Sacripanti. Two of them, Consumer A and Consumer B, testified at this hearing.
Consumer A purchased his vehicle in March, 2011. Sacripanti showed Consumer A three vehicles that he found on his computer. Consumer A stated that Sacripanti looked over his trade-in vehicle. After the purchase, Sacripanti told him to return so that he could do the detailing. The Registrar concluded that Sacripanti’s actions were in violation of the Terms and Conditions that the Applicants agreed to in August, 2010.
- The sale of the vehicle to Consumer B.
With regard to the sale to Consumer B, the Registrar argued that Consumer B was told to go to the dealership, All Car. She sent information to the dealership, on line, to indicate what vehicle she was looking for. Sacripanti called her at work and told her that they had found a vehicle for her. When she attended at the dealership, both Mr. Scalia and Sacripanti were present. Although most of the paperwork was done by Mr. Scalia, most of the communications were with Sacripanti.
When she purchased the vehicle, it was Sacripanti who showed her the features of the vehicle. He also picked up the vehicle from her place of work to effect some repairs.
Accordingly, the Registrar concluded that such involvement was also a violation of the Terms and Conditions.
Concerning the purchase of vehicles by Consumer A and Consumer B, the Registrar argued that Sacripanti was involved as a salesperson in those transactions.
- All Car purchased vehicles from Sacripanti who was acting on behalf of BCM.
The Registrar argued that it was the evidence of W.C., the general manager of BCM, that All Car purchased vehicles from Sacripanti who purchased them as a salesperson for BCM. The Registrar relied on the transactions listed on the Wholesale Buyers Agreements found at Tab 50F of Exhibit #3.
- Mr. Scalia had Sacripanti clean vehicles for him at All Car’s place of business.
Finally,, the Registrar argued that All Car engaged Sacripanti to clean cars for it. Counsel relied on Ms. Ethier’s testimony that Mr. Scalia told her, during her inspection on August 17, 2011, that Sacripanti helped Mr. Scalia by cleaning the vehicles but he was not involved in buying or selling them for All Car. Counsel also relied on the testimony of Ms. South who testified that she spoke to Mr. Scalia on October 11, 2011, and asked him if Sacripanti was involved with All Car in any capacity. Mr. Scalia responded that he was not, but then said that Sacripanti was at the All Car lot and did vehicle clean-ups.
In support of the Registrar’s position, Mr Osler referred the Tribunal to three decisions.
The first decision was that of the Ontario Divisional Court in 102265 Ontario Inc (c.o.b. Tri-Star Sales and Leasing v Ontario (Motor Vehicle Dealers Act, Registrar) [2004] O.J. No. 900 (“Tri-Star”). That case involved an appeal by the appellant dealers from a decision revoking their registration under the Motor Vehicle Dealers Act.
The appeal was not heard as the parties settled the matter with a consent order allowing the dealers to keep their registration provided they complied with the order’s terms. Less than two years later, the Registrar again gave notice of an intention to revoke the dealers' registration because they breached the terms of the consent order. The Commercial Registration Appeal Tribunal determined the dealers had breached one or more conditions of the order.
The Tribunal found that the Registrar had correctly decided that the appellants' past conduct provided reasonable grounds to believe that they would not carry on business with integrity, honesty and in accordance with the law. The Tribunal, therefore, directed the Registrar to carry out the proposal to revoke the appellants' registrations.
The Divisional Court dismissed the appeal. At paragraph 7 of the decision the Court stated:
7 … In our view, however, breach of the consent order alone -- by anyone -- was sufficient to result in the revocation of her registration.
The Registrar referred the Tribunal to another decision which also considered a breach of a consent order. That decision was Umair Gilani Syed Muhammed & Imperial Fine Cars Inc. v. Registrar, Motor Vehicle Dealers Act 2002, a decision of this Tribunal released February 26, 2013, and found at 2013 CanLII 11904 (ON LAT).
In the Imperial Fine Cars (“IFC”) decision, the Registrar issued a Notice of Proposal to revoke the registration of a salesperson, Umair Gilani, and to refuse the registration of IFC as a motor vehicle dealer. Both appealed to this Tribunal. The matter was resolved by a consent order issued by the Tribunal. The Tribunal allowed registration on terms. Those terms included a term that a certain party, RGSM, was not to be involved in the operation of IFC either directly or indirectly and not be employed by the dealership in any capacity.
A further term required the Applicant, Umair Gilani, to provide the Registrar with written notice of any new sources of financing or guarantors for the dealership within 5 days of having arranged for, or received, the financing, whichever came first.
An inspector from OMVIC attended at IFC for an unscheduled inspection. At that inspection, Umair Gilani misrepresented to the inspector the identity of a person working at the dealership. As it turned out, that person was RGSM, who was the bookkeeper and who was prohibited from working for IFC pursuant to the consent Order.
In addition, the Applicants in the IFC decision had also obtained financing from a person without disclosing that fact to the Registrar. That was a further breach of another term of the consent order.
As a result of the two breaches of the consent Order, the Tribunal concluded that the Registrar established that there were reasonable grounds for the belief that Umair Gilani – and thereby IFC - will not carry on business in accordance with law, and with integrity and honesty. At page 8 of the decision, the Tribunal, relying on the Tri-Star decision, states:
Breaches of consent orders are a serious matter (see 102265 Ontario Inc. c/o/b as Tri-star Sales and Leasing et al. v. Registrar Motor Vehicle Dealers Act, [2004] O.J. No. 900 (Div.Ct.) at para. 7). Based on the holding in 102265 Ontario Inc., supra, the breach of paragraph one of the Consent Order and the admitted instance of dishonesty in this case (misrepresentation of Rafi Gilani’s identity), the Tribunal finds that a revocation of the Applicants’ registrations is the appropriate disposition.
However, the Tribunal considers that the above two decisions can be distinguished from the case now before it on their facts. Those decisions dealt with consent orders. The underlying issues in those decisions were different from the instant case. This case does not deal with a breach of a consent order. In both decisions, the originating Notice of Proposal was resolved by consent. There was no hearing on either Notice of Proposal. There was then a breach of the consent order. It is appropriate to consider such breaches as good evidence that the future conduct of the registrants in those cases was suspect. That is not the situation now facing the Applicants in the instant case.
The Registrar also referred the Tribunal to the decision in Center City Quality Cars Inc. and Evelyn May Watling, a decision of this Tribunal released July 24, 2001 (“Center City”). In that case, the Applicant was registered on terms and conditions on or about January 30, 2001. Shortly thereafter, it was discovered the Applicant was using the services of an unregistered salesperson, namely Alexios Kalsatos, in contravention of both her terms and conditions and the Motor Vehicle Dealers Act. The Registrar issued a Notice of Proposal to revoke the registrations of Center City Quality Cars Inc. as a motor vehicle dealer and of Evelyn May Watling as a salesperson. The Tribunal ordered the Registrar to carry out its proposal.
The Tribunal in Center City found that, at all material times, the Applicant was aware that AK was an unregistered salesperson and was representing the Applicant as a motor vehicle salesperson and that this was not an isolated instance, but rather an ongoing course of conduct. The Tribunal, accordingly, found that compelling and persuasive evidence existed that Watling (the controlling mind of Center City) as well as Center City had not conducted themselves in accordance with law and with honesty and integrity.
The Center City decision can also be distinguished. The issue before the Tribunal in that case was a breach of a condition prohibiting a non-registered salesperson working for the dealership. The breach of that condition was an egregious violation of a plain and understandable condition. The Applicant in the Center City case knew that the salesperson was unregistered, yet still hired him. The Applicant, Watling, was present at all signings, so that there was a clear and deliberate breach of an unambiguous condition.
In contrast, Ms. Ethier testified in this appeal that Mr. Scalia had told her that Sacripanti was not involved with selling vehicles for All Car, and that Sacripanti was not on All Car’s payroll and was not paid for any help. In this appeal, there was no deliberate or reckless disobedience of a term or condition as found in Center City. The evidence revealed that Mr. Scalia was always candid and above board with OMVIC. He did not attempt to conceal any facts. There was no flagrant non-compliance with the Terms and Conditions imposed on the Applicants as there was in the Center City decision.
The Applicants’ position
Counsel for the Applicants urged the Tribunal to apply the principles that have been enunciated and adopted in the past as being applicable to cases such as this.
Counsel argued that there is a greater onus on the Registrar to revoke a licence (as is the case in this appeal) than there is to refuse to grant a licence. Consequently, only clear and convincing proof based on cogent evidence will justify the revocation of a licence. In Coates v. Ontario Registrar of Motor Vehicle Dealers and Salesmen [1988 CanLII 4555 (ON HCJ)](https://www.minicounsel.ca/scj/1988/4555), 65 O.R. (2d) 526 (Ontario Divisional Court) (“Coates”), the Court states, at paragraph 24:
24 In revoking a registration the tribunal is interfering with a right to make a living that has been equated to a property right: see Evans, Janisch, Mullan and Risk, Administrative Law, 2nd ed. (Toronto, Emond-Montgomery Publications, 1984), at p. 80. While the grant or refusal of a licence may be regulated as a matter of privilege, rather than right, the revocation of an existing licence has always been regarded as an interference with a right, not a privilege.
(Emphasis added)
At paragraph 31, the Court further confirms the obligation of the Registrar where it states, at paragraph 31:
31 This message is clear and has been consistently adopted by this court. Nothing short of clear and convincing proof based upon cogent evidence will justify an administrative tribunal in revoking a licence to practice medicine or to gain a livelihood in business.
(Emphasis added)
Counsel also referred this Tribunal to the often-quoted decision in Brenner v. Ontario (Registrar of Motor Vehicle Dealers and Salesmen) [1983] O.J. No. 1017 (Ontario Divisional Court) (“Brenner”) that set out the proper question that the Tribunal must consider in a case such as this. At paragraph 12, the Court stated:
12 The proper question at the rehearing remains, however, whether the past conduct of the applicant affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty. Unless the Tribunal can find that it does not, the Tribunal should not order the Registrar to refrain from carrying out his proposal.
It is the Registrar that has the burden of proof and the Tribunal owes no deference to the Registrar’s opinion (Re: Pucci [2008] O.L.A.T.D. No. 356 (“Pucci”), at paragraphs 101 to 104, citing Coates and Brenner, referred to earlier, with approval).
Past conduct of a registrant should be considered in light of a registrant’s unblemished history during the time before the conduct occurred that caused the Registrar to issue its Notice of Proposal. In Re: Runco [2008] O.L.A.T.D. No. 293 (“Runco”), the presiding Vice Chair had to deal with that very issue. At paragraphs 14 and 15, the Vice Chair states:
14 The issue for the Tribunal is whether Mr. Runco's past conduct, including his guilty plea of 2006, affords reasonable grounds to believe that he will not carry on the business of motor vehicle sales in accordance with honesty and integrity and in accordance with the law as set out in section 5.
15 With close to ten years of registration history (1999 through to 2008), the only factual information on the Applicant's past business conduct, as established by the evidence, was the occurrence of the one conviction, based on a guilty plea, for possession of stolen property which actually transpired six years ago. No other business activity, either favourable or negative, was presented.
Referring to the past conviction of the registrant in the Runco decision (in that case, a conviction arising from a guilty plea in 2006 for possession over $500.00 related to a stolen vehicle), the Vice Chair further states, at paragraph 22:
22 If the Applicant's conviction was alone considered, then the Registrar's conclusion might indeed be reasonable. However, here we are concerned with an individual who has been registered for a number of years without any other incident or concern. Surely, a past history of unblemished registration merits some significant weight when determining whether an individual is likely to carry on his future licensed activity within the section 5 requirements [note: now section 6 of the Act].
And, further, at paragraph 24:
24 The Registrar argued that the fact that no other complaints against the Applicant were placed into evidence is not relevant to his fitness for on-going registration as the issue is his conduct. However, conduct can be determined based on lack of complaint; indeed it must be, as common knowledge recognizes that capable conduct is rarely the subject of comment to an authority…
(Emphasis is added)
In the Runco decision, the Tribunal, citing Coates, above, with approval, concluded that there was no “clear and convincing” proof of past conduct which reasonably lead to the conclusion that the applicant in that case was not entitled to registration.
Counsel for the Applicants urged the Tribunal to come to the same conclusion in the instant case, having regard to the unblemished record of the Applicants in this appeal. Mr. Scalia had been registered since 1985 and there had been no complaints about his conduct before this matter arose.
Counsel for the Applicants further submitted that revocation of the Applicants’ registrations would be totally disproportionate to the degree of any alleged fault in this matter. In support of this argument, Counsel relied on the decision in 1526599 Ontario Inc. (c.o.b Pennzoil Lube Center) [2009] O.L.A.T.D. No. 143 (“Pennzoil”). Although that decision dealt with a proposal to revoke a motor vehicle inspection station (MVIS) licence, Counsel argued that the principle arising from that decision applies to the Tribunal’s consideration of this appeal. At paragraph 73 of the decision, the Vice Chair states:
73 After a careful review of all the evidence, the Tribunal concludes that the punishment of revocation is totally disproportionate to the severity of the infractions and would adversely affect not only the livelihood of the Applicants but also his employees.
Counsel submitted that, in the current appeal, Mr. Scalia had an unblemished record before the Registrar’s proposal, the Registrar never informed Mr. Scalia of the reasons for the Terms and Conditions, and the incidents were isolated, yet the Registrar seeks to close All Car.
There had been no consumer complaints against the Applicants, yet the Notice of Proposal was issued, ostensibly, “…to protect the public interest”, to quote from its preamble. There was no evidence, however, that either of the Applicants harmed the public. The evidence was that All Car sold mainly to wholesalers and not to retail customers. Ms. Ethier confirmed that, in the first year of operation, All Car sold to only ten retail customers.
The evidence discloses that the Registrar’s concerns arose only after Mr. Scalia stated that it was his intention to hire Sacripanti as a salesperson. It is significant that Mr. Scalia was up front and honest with the Registrar when he made the Registrar aware of his intention. He did not attempt to conceal his plans nor did he act surreptitiously.
Mr. Scalia also asked to have the Terms and Conditions amended to allow Sacripanti to work at All Car. The evidence of Ms. South confirms that. Such a request is not the action of a person who is trying to circumvent the law. On the contrary, such behaviour demonstrates that Mr. Scalia did not conceal his intention to hire Sacripanti and that he intended to comply with amended Terms and Conditions before he hired him, which is evidence of Mr. Scalia’s honesty and integrity and of his intention to operate in accordance with the law.
Ms. Ethier, OMVIC’s inspector, told Mr. Scalia that Sacripanti could have nothing to do with Mr. Scalia’s business. On cross-examination, she admitted that that advice was wrong, based on the wording of conditions 4 and 5. Mr. Spencer, the investigator, told Mr. Scalia that Sacripanti should not be on his premises, based on the same conditions. Yet, the contrary evidence of Ms. South, the Deputy Registrar, was that it was not a violation of the Terms and Conditions if Sacripanti were on All Car’s property. Ms. South admitted that it was not correct to say that Sacripanti could not be on All Car’s property or inside the building because the Terms and Conditions did not go that far. Furthermore, condition 4 allowed Sacripanti to be involved with All Car with the Registrar’s consent. It was not an absolute prohibition. Mr. Scalia asked for that consent.
If the interpretations of conditions 4 and 5 by Ms. Ethier and Mr. Spencer were inconsistent with the interpretation of the Deputy Registrar, it is not unreasonable to conclude that those conditions created an ambiguity. Consequently, it is also unreasonable to conclude that Mr. Scalia knowingly violated them when the Registrar’s own witnesses gave conflicting evidence as to their meaning and when there was no other evidence to allow this Tribunal to conclude that the Applicants knew the precise parameters of those conditions. The Applicants were never told why the Terms and Conditions were imposed.
The Alleged Breach of Condition 4
It is useful to repeat the provisions of condition 4. That condition states:
- The Registrants agree that Vincent Sacripanti shall have no involvement directly or indirectly in the financing or operation of the dealership.
The Registrar’s counsel informed the Tribunal that the question of financing was not an issue in this appeal.
The Tribunal can understand OMVIC’s confusion when both Mr. Scalia and Sacripanti applied for registration of All Car within one month of each other. Mr. Scalia applied on March 24, 2009 (Tab 15, Exhibit #3). Sacripanti applied on April 23, 2009 (Tab 17, Exhibit #3) by way of a Notice of Registration Change. The applications pre-dated the imposition of the Terms and Conditions in August, 2010.
In his application, Mr. Scalia indicated that he would be the sole officer and director. Sacripanti was not shown as an officer, director or shareholder. Mr. Scalia, however, informed OMVIC that he wanted to hire Sacripanti as a salesperson.
Sacripanti was not a registered salesperson at the time of his application. Therefore, condition 4 was imposed to require Mr. Scalia to be the only person to run the dealership and Sacripanti was to have no involvement in the business. Further, Mr. Scalia was to provide his own financing, not associated with Sacripanti. The evidence disclosed that Mr. Scalia was, indeed, the sole managing person of All Car.
However, a condition requiring Sacripanti to have no “involvement” in the operation of All Car does not equate with not being able to clean and detail vehicles through Sacripanti’s own business at All Car’s premises. Not having “involvement” surely means that Sacripanti could not be involved at the management or operational level of All Car or with the sale of vehicles. A plain wording of the condition does not prevent Sacripanti from operating his own business on the premises. Ms. South confirmed that in her testimony. Ms. Ethier admitted that, in doing his business at All Car’s property, Sacripanti had a legitimate reason for being on the property. W.C. also knew that Sacripanti’s business was at the All Car property but made no complaint about that.
The Tribunal concludes, on the evidence presented to it and on the facts as found, that there is no “clear and convincing proof based upon cogent evidence” (Coates, referred to earlier) that the Applicants violated condition 4.
The Alleged Breach of Condition 5
Condition 5 also bears repeating. It states:
- The Registrants agree not to conduct business with Vincent Sacripanti (either directly or indirectly), or with any corporation owned or controlled by him, without the prior written consent of the Registrar.
That condition, as already stated, is not an absolute prohibition. The Applicants could conduct business with Sacripanti with the Registrar’s consent. Such consent is precisely what Mr. Scalia attempted to obtain when he disclosed to OMVIC that he wanted Sacripanti to be his salesperson and also wanted the Terms and Conditions to be amended to allow him to do that. Mr. Scalia demonstrated no deception on that matter. He demonstrated no under-handed conduct in revealing that information and seeking that consent.
Condition 5 was imposed while Sacripanti was still unregistered, following the bankruptcy of his dealership. The condition was not unreasonable at the time.
Subsequently, after Mr. Scalia signed the Terms and Conditions in August, 2010, the Registrar proceeded to register Sacripanti as a salesperson in December, 2010, albeit with another dealership, BCM. The two acts are incongruous. On the one hand, the Registrar wishes to protect the public interest by imposing the Terms and Conditions on the Applicants that prevented them from being involved with Sacripanti. On the other hand, four months later, the Registrar registers Sacripanti as a salesperson, thereby allowing him to sell cars to the public, but through BCM.
The Registrar’s position is inconsistent, for the following reasons.
Ms. South agreed, in her testimony, that, as long as Sacripanti, once registered, looked for vehicles on the internet and at auctions, he was acting properly. W.C., the general manager of BCM, corroborated that evidence. According to him, that was what Sacripanti was supposed to do, in selling cars to the American dealer. Ms. South and W.C. both acknowledged that they knew Sacripanti would be at All Car’s building because there was no room at BCM, and that situation was acceptable to both of them. The evidence disclosed that Sacripanti was supposed to be there because the vehicles he purchased (through BCM) were shipped to his place of work at All Car’s location.
Ms. Ethier stated that All Car sold mainly to wholesalers and not to retail customers. She knew Sacripanti was registered with the dealership, BCM. She did not know why the Terms and Conditions were imposed on the Applicants’ registrations. Significantly, she knew that BCM authorized Sacripanti to clean vehicles at All Car’s building. Therefore, she knew there was a valid reason that Sacripanti was at that building.
Mr. Spencer stated, in his evidence, that the American dealer told him that he (the American dealer) knew that Sacripanti was detailing vehicles at All Car’s building and that Sacripanti was a licensed salesperson at the time. Mr. Spencer also knew that the businesses of All Car and Sacripanti were in the same building. There was no evidence that Mr. Spencer objected to that, no doubt because there was nothing in the Terms and Conditions to stipulate where Sacripanti’s business could be set up.
The anomaly is that condition 5 was imposed, yet the Registrar, W.C. and the Registrar’s inspector and investigator deemed it to be acceptable for Sacripanti to carry on his detailing business from All Car’s building, and no one considered that to be wrong.
The Tribunal concludes, from the foregoing analysis of the evidence, that the Applicants did not breach condition 5 in that they did not conduct business with Sacripanti, inasmuch as it was acceptable for Sacripanti to carry on his business at All Car’s building.
Considering the foregoing evidence, the Tribunal concludes that, for the Registrar to say that Mr. Scalia’s past conduct – in the absence of any complaints since he was registered in 1985 – afforded reasonable grounds to believe he would not conduct himself or his business with honesty and integrity and in accordance with law is an allegation that does not stand up to close scrutiny.
Counsel for the Applicants then responded to the arguments made by the Registrar.
The sale of the vehicle to Consumer A.
Consumer A saw the truck in question on All Car’s lot and stopped to look at it of his own accord. The evidence disclosed that all dealings related to the sale were with Mr. Scalia and all the paperwork was done by him. Those facts make this case different from the Center City case on which the Registrar relied. In Center City, all the paperwork was done by the unregistered salesperson.
All that Sacripanti did was to look for other vehicles on the Internet. The evidence of Ms. South and W.C. was that Sacripanti was authorized to do that as a licensed salesperson. It was also legitimate, according to the evidence of W.C., for Sacripanti to sell cars from Mr. Scalia’s lot once the vehicles were transferred from BCM to All Car. The evidence of such a transfer of Consumer A’s truck is found in the Wholesale Buyers Agreement found at page 1 of Tab 50F in Exhibit #3.
W.C. further confirmed that all detailing done by Sacripanti was legitimately done at All Car’s building. That is where Sacripanti did the detailing of Consumer A’s truck. W.C. also testified, on cross-examination, that there was nothing wrong with the sale of the truck to Consumer A.
Mr. Godard argued, therefore, that there was no evidence that Sacripanti made an improper sale of the truck to Consumer A.
The Tribunal agrees with that submission.
The sale of the vehicle to Consumer B.
Consumer B deliberately went to Sacripanti to look for a vehicle because her father told her to. He did not tell her to go to All Car, but to Sacripanti himself because her father worked with Sacripanti’s sister-in-law and had done business with Sacripanti in the past.
Therefore, there was a personal relationship between Sacripanti and Consumer B. Sacripanti told her that he would try to find the kind of vehicle she was looking for, an activity that has already been recognized by W.C. and Ms. South as authorized and proper by virtue of his licensing. Notwithstanding Sacripanti’s assistance to Consumer B, Mr. Scalia did all the paperwork.
The Tribunal agrees with Mr. Godard’s submission that there is no clear and convincing evidence that Sacripanti sold the vehicle to Consumer B. The Tribunal also concludes that, if Sacripanti’s “involvement” with Consumer B, or even with Consumer A, might be considered to be in violation of condition 5 (an argument that the Tribunal does not accept), such involvement, on the evidence presented, was so peripheral and minimal as to be negligible and certainly not worthy of depriving the Applicants of their licenses. Such a result would be, in the words of the Pennzoil case, “…totally disproportionate to the severity of the infractions.”
All Car purchased vehicles from Sacripanti who was acting on behalf of BCM.
Mr Godard submitted that there is no evidence to substantiate this allegation. On the contrary, the evidence is clear that BCM – not Sacripanti - properly sold vehicles to All Car. The copies of the Wholesale Buyers Agreements (Tab 50F, Exhibit #3) confirm this. They were signed either by BCM’s sales manager or by W.C. When Sacripanti purchased the vehicles in the first place, for sale in this manner, he was acting properly as a salesperson registered to BCM.
The Tribunal concludes, based on the facts presented to it, that there is not a scintilla of evidence, let alone clear and convincing proof based on cogent evidence, that the Applicants violated the Terms and Conditions by having involvement with or conducting business with Sacripanti.
Mr. Scalia had Sacripanti clean vehicles for him at All Car’s place of business.
The Registrar’s witnesses, Ms. South, Ms. Ethier, Mr. Spencer and W.C. all agreed, on cross-examination, that Sacripanti had the right to carry on his detailing business at Mr. Scalia’s dealership and this was unrelated to the purchase and sale of vehicles. There is no evidence of any right of the Registrar, in the circumstances of this case, to tell Sacripanti where to carry on his business.
The evidence clearly reveals that Sacripanti had the right, at All Car’s building, to detail vehicles. Those vehicles included the truck sold to Consumer A and those purchased for BCM that were subsequently purchased by the American dealer or by All Car, as the Wholesale Buyers Agreements demonstrated.
There is no “clear and convincing proof” that the Applicant’s were guilty of this alleged violation of the Terms and Conditions.
The Tribunal agrees with that submission.
CONCLUSION
Considering the evidence presented to the Tribunal, and for all the reasons outlined throughout this decision, the Tribunal concludes that the Registrar has not met the onus of proof recognized in the Pucci case. The Registrar would require far more cogent evidence to deprive the Applicants of their right to carry on their business (see Coates, above). The Tribunal finds that the past conduct of the Applicants does not afford reasonable grounds for belief that Mr. Scalia or his corporation, 2196596 Ontario Limited, operating as All Car Sales and Leasing, will not carry on business in accordance with the law and with honesty and integrity (Brenner).
For the reasons given, the Tribunal also finds that the Applicants have not breached a condition or conditions of the Terms and Conditions of their registrations.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs the Registrar not to carry out the Proposal.
LICENCE APPEAL TRIBUNAL
Kenneth W. Koprowski Vice Chair
Released: June 27, 2013