Licence Tribunal
Appeal d'appel en Tribunal matière de permis
DATE: 2015-07-13
FILE: 9356/CVOR
CASE NAME: 9356 v. Registrar of Motor Vehicles
Appeal under section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8, from a Decision of the Registrar of Motor Vehicles pursuant to section 17 to refuse to issue a Commercial Vehicle Operator’s Registration Certificate
Aqua Tech Solutions Inc. Appellant
-and-
Registrar of Motor Vehicles Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Laurie Sanford, Vice-Chair
APPEARANCES:
For the Appellant: Laurence Young, Paralegal
For the Respondent: Patrick S. Moore, Counsel
Heard in Toronto: June 5 and 22, 2015
REASONS FOR DECISION AND ORDER
Aqua Tech Solutions Inc. (“Aqua Tech”) is appealing to this Tribunal from a decision of the Deputy Registrar of Motor Vehicles (the “Registrar”) to refuse to issue a Commercial Vehicle Operator’s Registration (a “CVOR”) certificate.
Having reviewed the evidence and made findings of fact, having heard the submissions of the parties and having reviewed the relevant law, the Tribunal concludes that the appeal must fail and Aqua Tech will not be granted a CVOR certificate. What follows are the reasons for this decision.
LAW AND ISSUES
Section 17 of the Highway Traffic Act, R.S.O. 1990, c. H.8 (the “Act”) sets out the grounds on which the Registrar may refuse to issue a CVOR certificate. The Registrar relies on subsections 17(2), 17(3) and 17(4), which read:
(2) The Registrar may refuse to issue a CVOR certificate to an applicant if the Registrar has reason to believe, having regard to the applicant’s safety record and any other information that the Registrar considers relevant, that the applicant will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety.
(3) The Registrar may refuse to issue a CVOR certificate to an applicant if the applicant is related to,
(a) a person whose CVOR certificate has been cancelled, is or has been under suspension or is or has been subject to a fleet limitation;
(b) a person whose CVOR certificate suspension, cancellation or fleet limitation is under appeal; or
(c) a person who the Registrar has reason to believe, having regard to the person’s safety record and any other information that the Registrar considers relevant, will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety.
- (4) An applicant is related to a person for the purpose of subsection (3) if,
(a) the applicant and the person are related individuals;
(b) either the applicant or the person is a partner of the other or was a partner of the other or they have or have had partners in common;
(c) either the applicant or the person, directly or indirectly, controls or controlled or manages or managed the other; or
(d) the applicant and the person have or have had common officers or directors or they are or have been controlled, directly or indirectly, by the same shareholders.
The Registrar believes that Aqua Tech’s poor safety record during the time it held a CVOR certificate is of concern. Also of concern to the Registrar is the “spotty” safety record of 614128 Ontario Ltd. o/a Trisan Construction (“Trisan”), which the Registrar asserts is a related company by virtue of the fact that Trisan is owned and operated by the father of Matthew Santorelli, the owner of Aqua Tech.
Mr. Young, the representative for Aqua Tech, submits that despite some issues with the safety record of Trisan, the company has been permitted to continue operating and is improving its performance. Therefore, in Mr. Young’s submission, it would be unfair and absurd to deny Aqua Tech its CVOR certificate while permitting Trisan and its owner a second chance to improve their performance. Concerning the poor safety record of Aqua Tech, Mr. Young submits that the performance of Aqua Tech dates back ten years or more to a time when Mr. Santorelli was a very young man and not involved in the trucking operations of the company.
FACTS
Mr. Santorelli graduated from high school in 2000 and went to work for his father’s company, Trisan, in 2001, when it was first incorporated. Prior to that, Mr. Santorelli had worked for his father during summer vacations. Trisan is a construction company that focusses on drains, sewers and sidewalk construction. Mr. Santorelli began working in the field and over the years has been a crew supervisor and, more recently, a project manager for Trisan. In a recent public presentation, Mr. Santorelli identified himself as a “Vice-President” of Trisan. Although that is not his official title, Mr. Santorelli testified that he sometimes acts in that capacity.
In 2001, Mr. Santorelli’s father decided to purchase Aqua Tech, which specialised in a complementary business of drain re-lining. Mr. Santorelli’s father paid for the business but Mr. Santorelli was named as the owner. Despite his ostensible ownership, Mr. Santorelli’s evidence made it clear that his father was making the key operating decisions. Mr. Santorelli has only the vaguest knowledge of the fact that Aqua Tech was issued a CVOR certificate in 2002 but was assigned a “conditional” safety rating in the same year on the grounds of its alleged affiliation with a third company, 1417330 Ontario Ltd. (“141”). Mr. Santorelli convincingly denied that Aqua Tech was related to 141 but apparently no action was taken by either company to clarify the misunderstanding with the Registrar.
In the years immediately after the purchase of Aqua Tech, a number of vehicles were transferred from 141 to Aqua Tech. The Registrar pointed to these transactions as evidence of a relationship between 141 and Aqua Tech. However, Mr. Santorelli noted that 141 was owned by the same family who had previously owned Aqua Tech and testified that the transfer was part of the sale of Aqua Tech. The Tribunal accepts this evidence and concludes that there is no relationship proven to exist between 141 and Aqua Tech.
Aqua Tech also failed a facility audit in 2003. Mr. Santorelli has no knowledge of the audit or the results. Nor is he aware of what the safety rating of Aqua Tech was at the time of the termination of its CVOR certificate.
Mr. Santorelli does not deny a relationship between Aqua Tech and Trisan. Not only is Trisan owned by Mr. Santorelli’s father but Mr. Santorelli was candid in conceding that in the early days of the operation of Aqua Tech, it was his father who was making the operating decisions for Aqua Tech. In 2006, the CVOR certificate was terminated. This was the result of a decision by Mr. Santorelli’s father to merge the businesses of Aqua Tech and Trisan. Despite the fact that Mr. Santorelli was the ostensible owner of Aqua Tech, he was not aware that the CVOR certificate of the company had been cancelled until 2011.
Trisan also has a CVOR certificate. The Registrar characterizes Trisan’s safety record as “spotty” and this seems a fair assessment. The original CVOR certificate was issued to Trisan in 2001. In 2007, a warning letter was issued to Trisan. Warning letters are issued when the safety violation rate of a carrier exceeds 35%. Safety violation rates are a merged record of a carrier’s operation measured on a rolling 24 month period. Fewer than 4.5% of the carriers operating in Ontario have safety violation rates exceeding 35%.
In 2008, Trisan failed a facility audit. Facility audits are conducted by the Registrar as an assessment of the operation of the carrier on site and forms part of the overall safety rating of the carrier. In 2008, a “conditional” safety rating was assigned to Trisan. A conditional rating is the second lowest rating available. In 2009, a further facility audit was conducted and Trisan passed. Its safety rating was upgraded to “satisfactory”. In 2012, Trisan’s safety record again slipped to conditional and a warning letter was issued. In 2013, the safety record was upgraded to satisfactory but later that year, it again slipped to conditional. By 2013, the overall safety violation rate of Trisan had risen to 119.1%, putting it in the bottom 1% of all carriers in terms of the factors which the Registrar uses to measure on-road safety.
The Registrar proposed a cancellation of Trisan’s CVOR certificate. In February, 2014, employees of Trisan, including Mr. Santorelli and his father, together with a transportation consultant and the company’s Safety Manager, met with the Registrar. They produced a safety plan and made certain undertakings. The CVOR certificate of Trisan was continued, subject to certain terms and conditions being met, including the condition that the company’s safety violation record drop below 50% in the year from February, 2014 to 2015. Trisan appears to have met this requirement.
In 2011, Mr. Santorelli re-activated Aqua Tech as a company and began to bid on snow removal contracts with various municipalities. The reactivation was a joint decision taken with his father. Mr. Santorelli was successful in a number of the snow removal bids. It was in 2011 that Mr. Santorelli realised that Aqua Tech no longer had a CVOR certificate.
Most of Aqua Tech’s operations involved snow removal equipment which did not require a CVOR certificate. When a larger vehicle was required, requiring a CVOR plate, Mr. Santorelli used one of Trisan’s trucks. When Trisan’s CVOR certificate was put into jeopardy in 2013/2014, Mr. Santorelli decided to apply for an independent CVOR certificate to protect Aqua Tech’s business.
Mr. Santorelli testified that he had a “limited” role in the improvement of Trisan’s CVOR safety record and testified that all Trisan employees had been involved in improving the performance of Trisan’s trucking operations. Mr. Santorelli testified that he has had meetings with both the Safety Manager of Trisan and the Transportation Consultant hired by Trisan and feels he has learned a lot about the trucking side of the business. He has not taken a course in transportation management. He did not produce a trucking safety plan for Aqua Tech. His evidence was that the company’s safety plans were contained within their occupational health and safety plans. He gave no evidence about what plans, if any, exist to inspect trucks, establish a regular maintenance schedule or monitor the record-keeping or operations of the drivers. He gave no evidence of any plans to hire a safety manager to operate the trucking side of the business. He wishes to obtain a CVOR certificate for Aqua Tech so that he may not only pursue snow removal contracts independently from Trisan but also so that he can enter the concrete construction business, which has been his area of interest at Trisan.
DECISION
Mr. Young, representing Aqua Tech, submitted that it was Mr. Santorelli’s father, as the owner/operator of Trisan, who was the architect of Trisan’s poor performance rating. Yet, Trisan is being permitted to continue operating. It would be unjust, in Mr. Young’s submission, to deny Mr. Santorelli an opportunity to have a CVOR certificate on the grounds of his relationship with his father while allowing his father to continue to operate. If this were the only issue, then the Tribunal agrees that it would be an anomalous result. By the same token, it would be unfair to hold Mr. Santorelli responsible for the operations of Aqua Tech in the earlier period when it held a CVOR certificate given that he was not involved in the trucking operations.
Subparagraph 17(2) states that the Registrar, and by extension, the Tribunal may review an applicant’s safety record and “any other information that the Registrar considers relevant” to determine if an applicant “will not operate a commercial motor vehicle safely”. In this case, the Tribunal is concerned about Mr. Santorelli’s lack of training or experience in managing a commercial vehicle operation. He knows very little about the trucking operation of either Trisan or Aqua Tech prior to 2013/2014. He was focussed on the construction side of the business. While he has had some meetings with the managers of the trucking operations at Trisan and feels he has learned from them, he acknowledges that he has not taken a course in trucking management. He did not produce a safety plan for Aqua Tech.
Mr. Young suggested that the safety plan should be regarded as that which Trisan produced at their show cause meeting in 2014. However, Mr. Santorelli gave no evidence that he had adopted that plan for Aqua Tech or that he had been involved in developing the plan for Trisan. Indeed, he stated that he had acted in a limited capacity regarding Trisan’s safety operations.
Based on this lack of knowledge, training or experience, the Tribunal has reason to believe that Mr. Santorelli will not operate a commercial motor vehicle safely or in accordance with the Act. Mr. Santorelli is now the owner/operator of Aqua Tech. Therefore, Aqua Tech’s application for a CVOR certificate must be refused.
Mr. Young submitted that once an application for a CVOR certificate is refused, it is almost never granted on a re-application. The Tribunal sees no reason why that should be the result in this case. Mr. Santorelli impressed the Tribunal as a credible and forthright witness who made admissions against his own interest freely. If Mr. Santorelli were to gain training, experience, or both, in the safe operation of a trucking fleet and if he were to produce a trucking safety plan and put an experienced safety manager in place to run the trucking operation, the Tribunal sees no reason why a future application by Aqua Tech should be denied solely on the basis of this decision.
ORDER
The Tribunal directs the Registrar to carry out his refusal to issue a CVOR certificate to Aqua Tech.
LICENCE APPEAL TRIBUNAL
Laurie Sanford, Vice-Chair
Released: July 13, 2015