Licence Tribunal
Appeal d'appel en Tribunal matière de permis
FILE: 10102/MVIA
CASE NAME: 10102 v. Registrar of Motor Vehicles
Appeal under Section 50.2 of the Highway Traffic Act, R.S.O. 1990, c. H.8 from an Impoundment Pursuant to Section 55.1(3) of the Act.
Enterprise Rent-A-Car Canada Company Appellant
-and-
Registrar of Motor Vehicles Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Gary Yee, Associate Chair
APPEARANCES:
For the Appellant: Wendy Cloutier, Agent
For the Respondent: Sanjay Kapur, Agent
Heard by teleconference: April 7, 2016
REASONS FOR DECISION
A hearing was held on April 7, 2016, at Toronto, Ontario, by teleconference, to consider the Appellant’s appeal under section 50.2 of the Highway Traffic Act, R.S.O., 1990, c. H.8 (the “HTA” or the “Act”).
Pursuant to section 50.2(5) of the Act, the Tribunal CONFIRMS THE IMPOUNDMENT. As a result the Appellant’s motor vehicle will remain detained at the impound facility for a total of 180 days.
BACKGROUND
A motor vehicle was impounded under section 55.1 of the Act, and the impoundment was appealed by Enterprise Rent-A-Car Canada Company (“Enterprise”), which was the registered owner. The motor vehicle and date of appeal in this matter are as follows:
Owner: Enterprise Rent-A-Car Canada Company
Motor Vehicle: 2016 Volkswagen Golf GEL (the “vehicle”)
Date of Appeal: March 18, 2016
The Appellant, Enterprise Rent-A-Car Canada Company, rented the vehicle to their customer, K.M. (the “renter” or “driver”), on March 2, 2016. Ms. K.M. was driving the vehicle on March 7, 2016, when she was stopped and given a 90-day administrative driver’s licence suspension for allegedly failing to provide a breath or blood sample for alcohol. Ms. K.M.’s driver’s licence had also been suspended for life at that time, due to an impaired driving conviction on July 24, 2015. The Appellant was not aware of this suspension when they rented the vehicle to her on March 2, 2016, after Ms. K.M. showed the Enterprise employee her driver’s licence.
ISSUES
The Appellant’s grounds for appeal were based on the facts and submissions that were set out in the Appellant’s notice of appeal (Exhibit #1). The Appellant indicated that Ms. K.M. presented what appeared to be a valid driver’s licence to the car rental representative on March 2, 2016, and they had no knowledge of her suspension. While there was some initial discussion at the hearing about “exceptional hardship” and even “stolen” as being possible grounds in this appeal, it became apparent that the facts did not support those grounds, and the Appellant was pursuing only the ground of “due diligence”, as provided in section 50.2(3)(c) of the Act.
FACTS
Evidence for the Applicant
The Appellant, Enterprise Rent-A-Car Canada Company, was represented by the Group Risk Manager for the Southwest Ontario Group of Enterprise – Wendy Cloutier. Ms. Cloutier was also affirmed as a witness at the hearing. While she was not the actual company representative who rented the vehicle to Ms. K.M., there was no dispute about the evidence she provided about that transaction.
Ms. Cloutier indicated that renters must provide Enterprise with three pieces of identification, including a valid driver’s licence. In this case, Ms. K.M. provided the Enterprise representative with what appeared to be a valid driver’s licence, which was not expired, clipped or marked up, and not showing anything else to suggest that it was not valid. Ms. K.M. also signed the rental agreement, which was attached as part of the Appellant’s notice of appeal. This agreement states that the renter certifies that her licence is valid and not currently suspended or cancelled, and it also states that the renter is not permitted to be under the influence of alcohol or drugs when driving the vehicle. The renter then drove the vehicle in violation of the agreement, and it was impounded on March 7, 2016.
In cross-examination, the Ministry’s representative, Mr. Kapur, attempted to refer to a previous Tribunal decision involving Enterprise Rent-A-Car, even though he was unable to provide Ms Cloutier with a copy during this telephone hearing. Ms. Cloutier said this decision involved a different group in a different region. While there may be some common policies required by the corporate head office, each group is a different subsidiary that is owned and operated separately. For the southwest group, there are 48 locations in this region of Ontario. This subsidiary has been operating for about 21 years, and there are about 26,000 rental transactions a month.
In cross-examination, Ms. Cloutier acknowledged that she was aware of the Ministry’s telephone service that enables checking of a driver’s licence to see if the licence is under suspension. But she said that they did not use that service, for both financial and customer service reasons. Mr. Kapur indicated that the cost was $2.50 plus tax per licence check which Ms. Cloutier did not dispute. With the company’s volume of over 300,000 transactions a year, Ms. Cloutier indicated that this service would cost almost one million dollars a year.
In terms of waiting time, the Appellant’s concern was that this would add to the transaction time. Ms. Cloutier referred to the extra 26,000 phone calls per month that would have to be made, as well as the waiting time for the response from this telephone service to verify if the driver’s licence was still valid.
Mr. Kapur asked Ms. Cloutier if she was aware of the Ministry’s website that also had a similar licence-checking service, and she was not aware of this. There was initially some confusion because Ms. Cloutier thought that Mr. Kapur was referring to an online service that the company uses to check the licence status of their own Enterprise employees, and she said that using this service to check for information about customers would be in breach of that agreement between the company and the Ministry. In the end, the reasons that the company would have for not using the Ministry’s Internet service for checking renters’ licences would be the same as the company’s reasons for not using the Ministry’s telephone service – time and money.
Evidence for the Registrar
The documents tendered by the Registrar and admitted into the record were as follows:
Copy of the Ministry of Transportation records indicating that, among other things, the impounded motor vehicle is registered in the name of the Appellant car rental company;
A copy of the notice prepared by the officer who detained the impounded motor vehicle indicating, among other things, that the vehicle at the time it was detained was being driven by the person convicted of the offence under the Criminal Code of Canada outlined in point 4 below;
Copy of the Notice forwarded to the Registrar of Motor Vehicles regarding the impoundment;
Copy of the Ministry of Transportation records indicating that the driver at the time of impoundment had a number of driving-related offences and suspensions, including a conviction for impaired driving under the Criminal Code of Canada on July 24, 2015, pursuant to which the driver’s licence of the driver was then under suspension for life.
At the hearing, the Tribunal noted that there did not appear to be any documentary evidence in the file or in the Ministry’s submitted materials about the previous impoundments that would bring this impoundment within para. 3 of section 55.1(3), which provides for a 180-day impoundment period (instead of 45 or 90 days) when “there have been two or more previous impoundments under this section, within a prescribed period [being two years], with respect to any motor vehicle then owned by the owner of the vehicle currently being impounded.” Although this point was not contested by the Appellant, the Tribunal would expect the Ministry to file evidence of the previous impoundments in order to support an impoundment that was not 45 days. Also, in cases involving due diligence, it is possible that further evidence about the nature of those previous impoundments may be relevant in determining whether the Appellant should be more careful after already having experienced impoundments before, and therefore, should have learned from the previous situations about what to do to prevent more suspended drivers from getting access to the Appellant’s vehicles.
LAW
Section 55.1 of the Act provides that a motor vehicle may be detained and impounded, and section 50.2 provides the motor vehicle owner’s right of appeal to the Tribunal. On the appeal, the Tribunal may, under section 50.2(5) of the Act, confirm the impoundment or order the Registrar to release the motor vehicle. Under section 50.2(8), the decision of the Tribunal is, final and binding.
Section 55.1(3) of the Act states:
(3) A motor vehicle detained under subsection (1) shall be impounded as follows:
For 45 days, if there has not been any previous impoundment under this section, within a prescribed period, with respect to any motor vehicle then owned by the owner of the vehicle currently being impounded.
For 90 days, if there has been one previous impoundment under this section, within a prescribed period, with respect to any motor vehicle then owned by the owner of the vehicle currently being impounded.
For 180 days, if there have been two or more previous impoundments under this section, within a prescribed period, with respect to any motor vehicle then owned by the owner of the vehicle currently being impounded.
Regulation 631/98 provides that the prescribed period, referred to above, is two years.
The burden of proof is on the Appellant to satisfy the Tribunal that at least one of the following four grounds of appeal has been proven on a balance of probabilities, as set out in section 50.2(3):
(3) The only grounds on which an owner may appeal under subsection (1) and the only grounds on which the Tribunal may order the Registrar to release the motor vehicle are,
(a) that the motor vehicle that is impounded was stolen at the time it was detained in order to be impounded;
(b) that the driver’s licence of the driver of the motor vehicle at the time it was detained in order to be impounded was not then under suspension;
(c) that the owner of the motor vehicle exercised due diligence in attempting to determine that the driver’s licence of the driver of the motor vehicle at the time it was detained in order to be impounded was not then under suspension; or
(d) that the impoundment will result in exceptional hardship.
Due diligence was the only ground in this appeal. The specific wording of section 50.2(3)(c) refers to the owner exercising “due diligence in attempting to determine that the driver’s licence of the driver of the motor vehicle at the time it was detained in order to be impounded was not then under suspension.”
The Shorter Oxford Dictionary, 3rd ed. provides the definition of “due diligence” as follows:
Due: A. adj. 1. That is owing or payable, as a debt. 2. Belonging or falling to by right. 3. That ought to be given or rendered; merited. 4. Such as ought to be; fitting; proper; rightful. 5. Such as is requisite or necessary; adequate. 6. To be ascribed or attributed; owing to, caused by, in consequence of. 7. Under engagement or contract to be ready or arrive (at a defined time).
Diligence: 1. The quality of being diligent; industry, assiduity. 2. Speed, dispatch. 3. Careful attention, heedfulness, caution. 4. Law. The attention and care due from a person in a given situation....
Also, “due diligence” in Black’s Law Dictionary (sixth edition) at page 457 is defined as follows:
Due diligence: Such a measure of prudence, activity, or assiduity, as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances; not measured by any absolute standard, but depending on the relative facts of the special case.
FACTS AND ANALYSIS
The Tribunal finds that the Appellant did not exercise due diligence in this situation. The core issue in this appeal is whether Enterprise was exercising “due diligence” when it relied upon Ms. K.M. showing a driver’s licence that appeared to be valid, and did not take the extra step of verifying with the Ministry whether that licence was under suspension at that time.
Mr. Kapur tried several times in cross-examination to get Ms. Cloutier to admit that Enterprise was aware of the fact that some driver’s licences that appear to be valid may indeed actually be under suspension. Ms. Cloutier was reluctant to concede this point, and she kept referring to the company not being responsible if the renter’s licence was suspended later, after they had already rented the car. But this is of course not the relevant issue. What is relevant is the company’s responsibility to determine the status of the renter’s driver’s licence at the time of the initial rental. The Tribunal finds that any high volume car rental company – especially if they have had vehicles impounded before, as in this case where the impoundment is a 180-day one – would be aware of the fact that a renter who is in possession of a driver’s licence may actually still be suspended.
The Tribunal has dealt with many cases involving the ground of “due diligence,” usually involving an owner and their friend or family member. The Regulation is detailed in defining the meaning of “exceptional hardship,” but it does not define “due diligence.” The use of the term “due” in “due diligence” supports the view that there is no absolute standard, but that the required actions depend upon the particular circumstances, and an assessment of what a reasonable and cautious person would do under those circumstances. The objective of the impoundment legislation is to deter owners of vehicles from deliberately or carelessly allowing certain suspended drivers to drive their vehicles. This will help to promote more safety on the roads.
The appeal in this case involves a business transaction where the Appellant provides strangers – that is, customers – with access to a vehicle. Enterprise has made a business decision in the context of its high volume car rental business that it will not take the extra time or money to investigate the renter’s licence when the renter has presented what appears to be a valid driver’s licence. There was some evidence that Enterprise does more than just look at the licence. For example, Enterprise also relies upon a “do-not-rent” list that is shared among a number of rental car companies. Ms. K.M. was put on this list after this Enterprise vehicle was impounded last month. It is also possible that the company may do something more if they had some information that could lead them to suspect problems from the specific renter, and this could hypothetically lead to, for example, asking further questions or doing more investigation. But there did not appear to any suspicions raised when Ms. K.M. rented the vehicle.
At the hearing, the Tribunal heard that checking each driver’s licence with the Ministry’s telephone or Internet service would cost about $2.50 plus tax, and this would cost this Appellant close to one million dollars annually in fees. The Appellant appeared to suggest that “due diligence” should not require a business to spend this large amount of money. But even if this were a viable argument, the Tribunal did not receive any evidence about what these fees would be in relation to the business’s overall profit margin. The Ministry’s representative submitted that paying $2.50 per transaction was not a lot of money for a car rental business.
No evidence was presented as to how much extra time it would take for a driver’s licence to be checked – i.e., could that check be done in a couple of minutes, or would it take ten minutes or even more? The Tribunal notes that it would have helped the Ministry’s case if it could have provided evidence that its licence-checking system was fast and convenient. Ultimately though, the burden of proof is on the Appellant. While the Tribunal does not presume that this licence-checking process could be done in one or two minutes, it also has no evidence to find that this process is difficult or takes an unreasonable length of time – for example, that the line was always busy or that you usually wait too long on hold or online, etc.
The Tribunal’s function is to interpret what “due diligence” means in the legislation and in the situation that is presented to it in each appeal. It is not the Tribunal’s intent to set or control best practices or operational policies for car rental or leasing companies. While businesses may try to make or change their policies by being guided by the Tribunal’s interpretation of what “due diligence” means, the reality is that each appeal presents different circumstances, and each appeal requires its own analysis of the facts of the specific car rental situation that occurred.
The burden of proof is on the Appellant company to prove that their actions constituted “due diligence.” In this case, all the Tribunal heard was that the Appellant followed their policy in this case involving Ms. K.M., and the renter’s presentation of an apparently valid driver’s licence was enough. The Tribunal finds that this may be enough in certain situations involving an owner and driver who are friends or family members with no past history of driving-related problems. But when the relationship is more of a business transaction with a stranger (e.g., a car rental customer), then more action may be reasonably expected from the vehicle owner (the car rental company). In some situations, this may mean a closer examination of the licence, or a signed statement to confirm the driver’s licence status. Ms. Cloutier’s evidence about what happens at the Enterprise car rental counter would be consistent with this. But even that may not be enough. What the Tribunal must consider is whether due diligence requires additional investigation, and in what circumstances.
It is helpful to review a number of Tribunal decisions concerning car rental companies. In 7605 v. Registrar of Motor Vehicles, 2012 CanLII 57373 (ON LAT), the Tribunal found that it was prudent enough for the car rental company to look at the driver’s licence of each renter, and not have to use the Ministry’s licence-checking service, which the Tribunal described as just Ministry policy and not in the legislation. While this case appears to present a general proposition that favours all car rental companies, it is an older case without the kind of helpful reasons that appears in a number of more recent cases.
In 7823 v. Registrar of Motor Vehicles, 2013 CanLII 5994 (ON LAT), the relevant factor for the Tribunal appeared to be that the Appellant car rental company had previously had two or more vehicles impounded, which meant that they were aware of the fact that there were risks with accepting the drivers’ licences at face value, but the company had not presented any evidence of their response or changes to address this risk. The Appellant in this case was also Enterprise Rent-A-Car. Ms. Cloutier said it was a different regional group and subsidiary, and she was not familiar with this case. The Tribunal did not permit Mr. Kapur to quote from this case in his final submissions because he had not provided the Appellant with copies before the telephone hearing. The Tribunal accepted Ms. Cloutier’s objection that this case would not be relevant in terms of the findings of fact needed for this appeal, since it involved a separate organization. The Tribunal also ruled against a short adjournment to allow for Mr. Kapur to e-mail this case to Ms. Cloutier to consider and respond to.
Two recent cases show how each appeal must be decided on its own facts. For example, in 9330 v. Registrar of Motor Vehicles, 2015 CanLII 9424 (ON LAT), it was a long-term car rental, and the renter came into the company offices every month to pay the bill and also to show his driver’s licence. In the context of this ongoing customer relationship, this action was seen as due diligence. The Tribunal did not accept the Ministry’s argument that the company should also have used the Ministry’s licence-checking service each month when the renter showed up.
In 9849 v Registrar of Motor Vehicles, 2015 CanLII 89158 (ON LAT), the Tribunal found that the car rental staff had failed to notice that the last six digits on the renter’s driver’s licence was not a number that could represent any possible birthdate, and this should have been obvious enough to show that it was a false licence. In addition, the company did not use the Ministry’s licence-checking service because of the time and cost involved. The Tribunal stated:
The Appellant’s staff failed to examine the licence proffered by the suspended driver in anything more than a cursory manner. The Appellant also failed to make use of a ready tool of which it was aware to confirm the validity of the licence in question. Either of these failures indicates that the Appellant failed to exercise reasonable prudence to ascertain the facts before entering into the rental agreement.
In the current appeal, the Tribunal notes that this is a 180-day impoundment, which means that there have been at least two impoundments against this same Appellant in the past two years. This places a greater responsibility on the Appellant to show what it is doing to prevent rentals to persons whose licences are suspended (as noted in the 2013 Tribunal decision above – 7823 v. Registrar of Motor Vehicles).
Apart from the previous impoundments, it is still important to note that the burden of proof is on the Appellant to show that it exercised due diligence in attempting to determine that the renter’s driver’s licence was not under suspension. In considering what is due diligence in this situation, the Tribunal notes that this involves a vehicle owner that is in the business of giving access to a vehicle to thousands of drivers. In these high volume situations, there will be some drivers who still have their driver’s licences even though they are suspended, and the car rental company knows or ought to know about this risk. The Ministry has made available a licence-checking service by telephone or Internet, and the cost is $2.50 each. It would appear reasonable, within the framework of the impoundment legislation and its public safety objectives, that a car rental company should use that service before letting a renter drive a vehicle, to avoid permitting a suspended driver from getting access to a vehicle, unless the company can show how it is exercising due diligence even without using this service.
The Appellant referred to an overall cost of almost one million dollars but did not show why this cost would justify not using this service which costs $2.50 plus tax for each renter. The Appellant’s concerns about the time delay at the rental counter were not supported by any evidence other than a vague reference to the additional time it would take to use this licence-checking service. The Appellant also did not address the fact that this is at least the third, if not more, impoundment within the past two years. Ms. Cloutier was not aware of any discussion in the company about changing their policies or practices to address this issue.
The Tribunal is only left with the conclusion that the Appellant is choosing to not use this licence-checking service for financial and customer service reasons, and is thereby choosing to risk the occasional impoundments as a cost of doing business, even if it means there is an increased risk to the public that can reasonably be avoided.
In summary, the Tribunal finds that the Appellant has not proved that it exercised due diligence in renting the vehicle to Ms. K.M.
DECISION
After considering the evidence, pursuant to the authority vested in the Tribunal under section 50.2(5) of the Act, the Tribunal confirms the impoundment of the Appellant’s motor vehicle, and it will remain at the impound facility for a total of 180 days.
LICENCE APPEAL TRIBUNAL
Gary Yee, Associate Chair
RELEASED: April 13, 2016