Licence Tribunal
Appeal d'appel en Tribunal matière de permis
FILE: 9846/MVDA
CASE NAME: 9846 v. Board of Trustees, Ontario Motor Vehicle Dealers Compensation Fund
Appeal from a Decision by the Board of Trustees, Ontario Motor Vehicle Dealers Compensation Fund, under the Motor Vehicle Dealers’ Act, 2002 to Disallow a Claim
Appellant Appellant
-and-
Board of Trustees, Ontario Motor Vehicle Dealers Compensation Fund Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Richard Macklin, Vice-Chair
APPEARANCES:
For the Appellant: Self-represented
For the Respondent: Jane Samler
Heard in Toronto: March 3 and 31, 2016
REASONS FOR DECISION AND ORDER
Overview
The Appellant appeals to the Licence Appeal Tribunal (the "Tribunal") from a decision of the Board of Trustees, Ontario Motor Vehicle Dealers Compensation Fund (the "Board"), dated September 29, 2015.
In that decision, the Board denied the Appellant's claim for compensation from the Motor Vehicle Dealers Compensation Fund (the "Fund").
The Fund is a consumer protection program that provides compensation, in prescribed cases, to consumers who have suffered losses in transactions with registered motor vehicle dealers.
Facts
i) Appellant's Vehicle Transaction
The Appellant planned to spend the July 2011, holiday weekend visiting her aunt in New Jersey. She needed transportation and decided to buy a used car. She had previously purchased a used car from Mr. Ed Soliman at E Auto Limited in Toronto. She went back to him for the new purchase. She told Mr. Soliman that the impetus for the purchase was her road trip to New Jersey. Mr. Soliman recommended, and the Appellant accepted, a 2002 Mazda MPV, at a price of $3,900 (inclusive of taxes). The car had 187,000 km on it. The purchase contract was in the form of a standard Used Car Dealers Association of Ontario, Bill of Sale.
In some cases, used cars are purchased on an "as is" basis. Under the standard Bill of Sale, a car is only sold "as is" if expressly acknowledged by the purchaser. The absence of the purchaser's initials, next to the "as is" clause, means the vehicle was not purchased "as is". Specifically, the Bill of Sale states:
Terms of Contract
VEHICLE SOLD "AS IS": The motor vehicle sold under this contract is being sold "as is” and is not represented as being in roadworthy condition, mechanically sound or maintained at any guaranteed level of quality. The vehicle may not be fit for use as a means of transportation and may require substantial repairs at the purchaser's expense. It may not be possible to register the vehicle in its current condition.
If this space is not initialed, this clause does not form _____________ part of this agreement [Emphasis added] Purchaser's Initial
The Appellant did not initial the "as is" clause for the Mazda MPV.
There were some signs of trouble with the new purchase. The handbrake was loose, lying on the floor of the car. Mr. Soliman told the Appellant that he would install the brake after she returned from her trip.
The Appellant testified that she was not provided a copy of the safety certificate or emissions test. She also stated that she was charged $20.00 for gasoline, but the car had almost no gas.
The Appellant drove to New Jersey with her young daughter on June 29, 2011. On their way back to Toronto, the car's engine started to emit smoke. The car slowed and the Appellant moved the car to the side of the road. The Appellant got her car to a local repair shop, Stanley Automotive. The shop's mechanic determined that the engine "was shot" and that the car would require in excess of $2,000 (USD) to repair. The Appellant left the car with Stanley Automotive and incurred the cost of a rental car, amongst other costs, in order for her and her daughter to get home.
ii) Dealer Refuses to Remedy
The car buying experience did not get better after the Appellant returned to Toronto. She visited Mr. Soliman at the dealership, seeking a refund, and the two got into an argument. The Appellant states that Mr. Soliman pushed her. He was charged criminally for assault. He later entered into a 1-year peace bond. He also refused to remedy the car's deficiencies.
iii) The Small Claims Court Process
The Appellant sued Mr. Soliman over the defective Mazda MPV, in the Ontario Superior Court of Justice (Small Claims Court). The claim was issued on July 11, 2011. From the outset, the claim was beset by excessive delay, owing primarily to the defendant's non-cooperation. At one point, Mr. Soliman's defence was struck on account of an unpaid costs order. The action was reinstated, but not until $800 in costs were paid to the Appellant. The Appellant was put through numerous appearances and adjournments. Ultimately, the claim was dismissed, following a trial, held on February 13, 2015. At the time the claim was dismissed, it had been in the Small Claims Court system for three and one-half years.
The Court, in its reasons for dismissing the claim, reviewed the evidence of the parties and noted that the car had not been purchased on an "as is" basis. Paradoxically, the Court ruled against the Appellant on grounds of caveat emptor:
I have no doubt that the plaintiff is correct that the defendant, Mr. Soliman told her that the car was certified and that it passed the emissions test, but that is not the issue here. Here, the plaintiff [name] purchased a very old car, a 2003 [sic] car with 170,000 kilometers or thereabouts. Under these circumstances the buyer must beware, caveat emptor applies at law. That principle applies unless the purchaser bargains for a warranty. [Emphasis added]
The trial judge did not consider section 15 of the Sale of Goods Act, R.S.O. 1990, c.S.1, and whether, as a result, warranties of fitness or merchantability applied in the circumstances.
The Appellant did not appeal the Court's ruling. She testified that the costs of ordering the necessary transcripts, copying the record and otherwise preparing the appeal were prohibitive, relative to the value of her claim.
iv) OMVIC’s Handling of the Case
The Appellant initially contacted the Ontario Motor Vehicle Industry Council ("OMVIC") upon her return to Canada, on July 10, 2011. She testified that she spoke with an OMVIC representative, Andrea Lawson and submitted a complaint to Ms. Lawson over the phone. She states that Ms. Lawson suggested that she file a civil claim against the dealer. As a result of that suggestion, the Small Claims Court action, described above, was issued the next day.
OMVIC maintained a "watch and wait" approach to the Appellant's case and held her July 2011 complaint in abeyance, during the Small Claims Court process. The Appellant made a second complaint in August 2012, which was also held in abeyance, pending the result of the Small Claims Court action.
Following the dismissal of her civil claim, the Appellant made her claim for compensation from the Fund, dated February 17, 2015. The primary grounds for the claim were that the "dealer made a misrepresentation about the motor vehicle which the claimant indicated was material for the vehicle to have" (see Compensation Claim, dated February 2, 2015, Exhibit 6, Tab 2, p. 6).
The Board dismissed the Appellant's claim on September 23, 2015. The basis for the dismissal was set out in correspondence dated September 29, 2015. Specifically, in that correspondence, the Board stated as follows:
Your claim was presented to the Board of Trustees of the Motor Vehicle Dealers Compensation Fund on September 23, 2015 and was considered under Section 79(3)7 [sic] of Regulation 333/08 which was the legislation in force at the time of your transaction.
Your claim was submitted beyond the two year limitation found in Section 80(1). The Board agreed to exercise its discretion found in Section 80(2) and grant an extension of time to consider the claim.
Unfortunately, it was the Board's decision to deny your claim. The basis of your claim was adjudicated before a court of competent jurisdiction and a decision was made to dismiss the claim.
The Board's decisions are reached through careful consideration of each claim, based on the claim's specific merits, within the context of the governing regulations. [Emphasis added]
Mr. Jeff Ross, testified on behalf of the Board and stated that in this case, and others, the Board does not look behind the findings of a court of competent jurisdiction, based on the Ontario Divisional Court's Judgment in Didaskalou v. Motor Vehicle Dealers Compensation Fund, (Unreported: November 29, 1994) (O.C.G.D. (Div.Ct.)). The Board submitted that Didaskalou was binding on the Tribunal, and thus the appeal should be dismissed on that basis. In submissions, the Board confirmed that it did not review the trial record or the trial judge's reasons, as part of its deliberations.
ISSUES ON APPEAL
This appeal raises the following issues:
i) Was the Appellant denied fairness by OMVIC directing her to file a civil claim?
ii) If the answer to i) is no, is the Tribunal bound by the Didaskalou Judgment?
iii) If the answer to ii) is no, has the Appellant met the test for compensation?
iv) If the answer to iii) is yes, how much compensation should the Appellant receive?
THE LAW
i) The Legislative Scheme
The Motor Vehicle Dealers Compensation Fund is a consumer protection program, financed by Ontario's registered motor vehicle dealers.
According to OMVIC, the Fund exists to compensate consumers for losses suffered, if they meet prescribed criteria.
The process for a claim under the Fund begins with the customer giving written notice to the Registrar (see s. 80(1) of Ontario Regulation 333/08, to the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Schedule B) (the "Regulation")). On receiving notice of the claim, the Registrar is to forward the claim to the Board of Trustees, which administers the fund (see s. 80(4) of the Regulation).
The Board has jurisdiction to hold a claim in abeyance and require a customer to bring an action "against any person whom the customer might reasonably be considered as having a cause of action in respect of the claim" (see s. 82(3)(c) of the Regulation).
The ground of compensation that is pertinent to this appeal is found in s. 79(3)5 of the Regulation. Section 79(3)5 entitles the claimant to a payment from the Fund if he or she satisfies the conditions in s. 79(1), and if:
- The trade from which the claim arose was a purchase or lease of a motor vehicle from the registered motor vehicle dealer. The claim does not exceed the total sale price of the vehicle at the time of the purchase, if the claim arose from a purchase of the vehicle, or the lease value of the vehicle included in the information mentioned in subparagraph 1 i of subsection 41 (1) at the time of the lease, if the claim arose from a lease of the vehicle. The claim is for a deficiency that the dealer has refused to remedy. The deficiency is something that,
i. the vehicle does not have and the customer had indicated was material to the trade for the vehicle to have, or
ii. the vehicle has and the customer had indicated was material to the trade for the vehicle not to have.
The Board of Trustees is statutorily obliged to determine the eligibility of the claim (see s. 82(1) of the Regulation).
If a claim is denied, the complainant has a right of appeal to the Tribunal. After a hearing, the Tribunal may allow a claim in whole or in part, or refuse the claim (see s. 85 of the Regulation).
ii) Issue #1 – Was the Appellant Treated unfairly in being directed to sue?
The Appellant submitted that OMVIC treated her unfairly in July 2011, and that the intake clerk should not have directed her to pursue her dispute in Small Claims Court. She states that the authority to direct a complainant to a civil suit is reserved for the Board of Trustees, under s. 82(3)(c) of the Regulation. As a result of what occurred, the Appellant was put through a wholly unsatisfactory Small Claims Court proceeding and has been denied compensation based on, what appears to be, with respect, suspect reasoning on the part of the trial judge.
When the Appellant contacted OMVIC in July 2011, she had not yet issued the Small Claims Court claim, and was clearly intent on obtaining compensation (see Notes dated July 11, 2011, Exhibit 6, Tab 5, pp. 199-200). She argues that in a consumer protection regime, such as the Compensation Fund, the proper course would have been for the OMVIC intake worker to suggest that the Appellant deliver a complaint and request compensation. If she was directed to issue a civil claim, that direction ought to have come from the Board.
On the other hand, OMVIC does have a website that explains the Compensation Fund process and it can thus be argued that it was incumbent on the Appellant to inform herself of her rights and institute a complaint to the Fund.
While the Tribunal is concerned that the Appellant has been through a difficult and unfair process, the Tribunal's authority is restricted to reviewing the Board of Trustees' dismissal of the Appellant's compensation claim. The Tribunal does not have jurisdiction to review the conduct of an OMVIC intake worker.
In making its decision, the Board felt bound by the result at the Small Claims Court, on account of the Didaskalou judgment.
Whether the Board should have based its decision on that judgment is the next issue for consideration on this appeal.
iii) Issue #2 – Is the Tribunal Bound by the Didaskalou Judgment
a) The Decision in Didaskalou
In Didaskalou, the claimant obtained judgment in respect of a motor vehicle trade, in the sum of $8,874.00 plus costs of $2,200. The judgment was not appealed. The claimant sought payment from the dealer and was unable to collect. Importantly, the section in the Regulation relied upon by the claimant in Didaskalou, was different than the section being relied upon by the Appellant in this appeal (s. 79(3)5). The section in issue in Didaskalou was section 12(3)1 of then Regulation 801. That section is similar in many material respects, to the current section 79(3)10 of the Regulation. Under the provision then in place, the claimant was entitled to claim compensation from the Fund, for pecuniary losses that arose out of a transaction involving a trade in a motor vehicle and where:
The customer has recovered in any court in Ontario a judgment in respect of the claim and the judgment has become final …
The Board of Trustees in Didaskalou denied the claim. The Board argued that notwithstanding the judgment in question, the subject matter of the dispute was in respect of matters not covered under the legislation, and as such disentitled Ms. Didaskalou to compensation. The matter came before a predecessor tribunal to the Licence Appeal Tribunal, the Ontario Commercial Registration Appeal Tribunal (see Didaskalou (Re), [1994] O.C.R.A.T.D. No. 9 (Appel, Killoran)).
At the Tribunal level, it was held that, in light of s. 12(3)1, the question was not whether the items in question were otherwise covered under the legislation. The question was whether there was a final judgment, for pecuniary losses, that arose from a transaction involving a trade in a motor vehicle. In that case, the judgment was for $3,500 in diminution in price, $2,254 in repair costs and $2,200 in costs fixed by the trial Judge. The Tribunal held that the diminution in price and the repair costs were pecuniary losses that arose from a trade, and that the Tribunal could not look behind the trial court's judgment (see pp. 4-5). The Tribunal further held that the costs fixed by the Court were not compensable in that, under a different section of Regulation, only costs that were "assessed" (as opposed to "fixed") were compensable.
The Tribunal's decision was appealed to the Divisional Court (see Didaskalou v. M.V.D.C.F. (Unreported: November 29, 1994 (O.C.G.D. (Div.Ct.)).The Court agreed with the Tribunal and held that the Board of Trustees could not look behind the judgment, in addressing a claim under s. 12(3)1 of the Regulation. The Court also held that the repair costs in that case did not "arise" out of the transaction, and thus reduced the amount of the compensation by $2,254. The Court, however, allowed a cross-appeal on the issue of the costs. Hence, the claim for compensation was increased by $2,200, until that finding was set aside on a reconsideration by the Court (see Didaskalou v. M.V.D.C.F., [1995] O.J. No. 98 (O.C.G.D.-Div.Ct.).
b) The Tribunal is Not Bound by the Didaskalou decision
As noted above, the Board submits that it, and the Tribunal, are bound by the authority in Didaskalou and that the Appellant's claim, should be dismissed in light of the Small Claims Court having dismissed her civil claim.
It is the Tribunal's view, that Didaskalou is distinguishable from the case on appeal. The basis for the judgment in Didaskalou was that one of the elements for compensation was the obtaining of a favorable judgment. So long as the judgment was in respect of a pecuniary loss that arose from a motor vehicle trade, the analysis under s. 12(3)1 of the then Regulation was complete. In other words, s. 12(3)1, was premised on the existence of a judgment. So long as the other components of the section are met, the judgment cannot be looked behind to defeat the claim.
In the case on appeal, if the Appellant were seeking compensation under the successor section to s. 12(3)1- s. 79(3)10 of the Regulation - the authority in Didaskalou, amongst other things, would stand in her way. The Appellant, however, is not seeking compensation under s.79(3)10, but rather seeks compensation under s. 79(3)5. As noted above, this section posits a different test and requires the Appellant to establish that the vehicle she purchased was deficient in terms of something the Appellant had indicated was material to the trade.
Thus, the Tribunal is concerned that, as noted above, the Board did not review the trial judge's reasons or the record of proceedings. The Board mechanically applied the ruling from Didaskalou, in respect of a s. 12(3)1 (now s. 79(3)10 of the Regulation) case, to the s. 79(3)5 claim that was before them.
That is not to say that the Small Claims Court judgment is irrelevant to this case. Indeed, it can be argued that, in the interests of finality, the Small Claims Court judgment should control these proceedings, under the doctrine of issue estoppel (see Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, at para. 19). This is especially so, in that the Appellant chose not to appeal the Small Claims Court findings.
The Tribunal finds, however, that in this case, finality must ultimately yield to the justice of the case, and thus, as stated by Binnie J., in Danyluk, at paragraph 1:
A judicial doctrine [issue estoppel] developed to serve the ends of justice should not be applied mechanically to work an injustice.
As stated above, it is the Tribunal's respectful view that the Board in this case has mechanically applied the results of the Small Claims Court trial to its determination of the Appellant's compensation claim. The Board did not review the reasons for decision or the trial record. It applied the Didaskalou judgment, when the more nuanced doctrines of issue estoppel or abuse of process ought to have been considered. In the case of issue estoppel, for example, the existence of a previous judgment is merely one component of the test. The Board would have also been required to determine whether the same question was decided and whether the parties to the judicial decision or their privies, were the same persons as the parties before the Board (see Danyluk, supra; see also Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, at paras. 28-20). On the basis of the record before the Board, it is clear that - at least- the "same parties" test was not met.
Even if the "same parties" branch of the test had been met, the Tribunal would still have to consider whether to exercise its residual discretion to not apply issue estoppel if "its application would work an injustice" (see Penner, supra, para. 29). No such consideration was made by the Board. On the facts of this case, especially the trial judge's misapprehension of the caveat emptor doctrine, the Tribunal finds, with respect, that application of the issue estoppel doctrine would work an injustice.
The Board submits that another reason the Board cannot go behind the Small Claims Court judgment is that it works a particular unfairness on the dealer. Specifically, under s. 46(2) of the Act, if the Fund pays a claim to a customer, the dealer must, in prescribed circumstances, reimburse the Fund. The dealer successfully avoided liability in Court. If that judgement is circumvented through a complaint to the Fund, the dealer would be unfairly forced to pay the Fund following a payment by the Fund to the Appellant.
The Tribunal notes, however, that the prescribed circumstances mentioned in s. 42(6), are set out in s. 87 of the Regulation. Section 87 only compels a payment by the dealer, in limited circumstances, none of which apply in this case. In any event, such considerations arise more appropriately under the doctrine of abuse of process. On this appeal, the Board chose not to defend its decision on the basis of that doctrine. Abuse of process would be an argument that might be open to the dealer, not the Board, to raise, if it received a demand for payment – from the Board – in this case.
In conclusion, on this issue, the Tribunal finds that, in these circumstances, the trial judge's findings should not be mechanically applied to the Appellant's claim for compensation. Moreover, the claim should not be dismissed on grounds of issue estoppel.
Having succeeded on Issue #2, the Appellant must still establish, as part of her Appeal, that she is entitled to compensation under the legislation. The Tribunal turns now to that issue.
iv) Issue #3 – Is the Appellant Entitled to Compensation under section 79(3)5 of the Regulation
As noted above, to succeed, the Appellant must satisfy s. 79(3)5 of the Regulation. In its dismissal of her claim, and at this hearing, the Board did not rely on any of the pre-requisites to compensation set out n s. 79(1) of the Regulation, in challenging the Appellant's claim.
The Tribunal accepts the Board's position that it is not given authority to fully adjudicate the wide variety of disputes that can arise between a customer and a dealer. A review of the 11 grounds for compensation under s. 79(3), of which s. 79(3)5 is one, indicates that compensation is generally reserved for uncontentious cases. These include losses to a consumer where: the dealer has already been made the subject of a successful proposal (i.e. revocation or a suspension), the dealer has been convicted of an offence, the dealer has gone bankrupt, failed to pay a judgment, and related defaults.
In the case of s. 79(3)5, the Appellant can obtain compensation if she satisfies a conjunctive test. First, there must be a deficiency that the dealer has refused to remedy. On this point, the Tribunal finds that the engine was a deficiency and the dealer has clearly refused to remedy it. Indeed, the dealer's obstinacy led to criminal charges and several cost orders in the Small Claims Court proceedings. The Board states that the dealer was prepared to remedy the deficiency and had agreed to a pre-trial Order, in the Small Claims Court proceedings, for a joint inspection of the car. That arrangement fell apart, however, when the dealer insisted that the inspection be conducted by a body shop of his choosing. In these circumstances, it cannot be said that the dealer was truly prepared to remedy the deficiency.
The second part of the conjunctive test is whether the deficiency was "something that the vehicle [did] not have and the customer indicated was material to the trade".
In attempting to understand s. 79(3)5, one can consider an example where a car is purchased, sight unseen, and the customer insists that the car be a navy blue colour. If the car that arrives is green, a claim under s. 79(3)5, could likely be sustained. The question on appeal is, does the section capture the fact situation in this case?
The Tribunal finds, especially in light of the consumer protection premise of the Fund, that there was a deficiency in this case. The Tribunal finds that the deficiency was in respect something that the vehicle did not have – the functionality to successfully travel from Toronto to New Jersey and back. The Tribunal further finds that the customer did indicate that this functionality was material to the trade. Specifically, as noted above, the impetus for the car purchase was the Appellant's trip. The Appellant made this known to Mr. Soliman. Mr. Soliman suggested the Mazda MPV. Although the Appellant did not extract a specific promise that the engine would not seize on the way back, such an express indication is not necessary. In the Tribunal's view, it suffices that the Appellant indicated that the car would, on purchase, need to make a return trip. The failure of the MPV to do so, on account of the engine failure, establishes a valid claim on the Fund.
The Board, in submissions, echoed the findings of the Small Claims Court judge, relying on the age of the car, its high kilometer reading and the inherent unreliability of cars of that nature. In the circumstances described above, however, the Board cannot avail itself of this defence, especially when the dealer chose not to sell the car on an "as is" basis.
v) Issue #4 – What Amount of Compensation is the Appellant Entitled to
The Appellant's claim for compensation must fit within the four corners of s. 79(1) and 79(3) of the Regulation. Under s. 79(1), the Appellant must establish that there has been a pecuniary loss that arises from a trade in a motor vehicle and the claim meets a requirement set out in s. 79(3). The requirement in s. 79(3), that is applicable in this case, is s. 79(3)5. In that section, as stated previously, the claim is limited to a deficiency that the dealer refused to remedy and that the customer indicated was material to the trade. As found by the Tribunal, that deficiency was the car's inability to make it back to Toronto. The car, in this case, may have had numerous other deficiencies. The only one, however, that the Appellant indicated was material to the trade, and that turned out to be deficient, was the inability to make the return trip. On the basis of the wording of ss. 79(1) and 79(3)5, the pecuniary loss flowing from that "indication" and that "deficiency" is the limit on the claim.
In this case, the Appellant testified that, on paying $1,300 (USD) for a new engine, and $75 (USD) for a new muffler, she was able to get the car back to Toronto. The Tribunal finds that this is the total pecuniary loss, arising from the trade, and that this amount remedies the deficiency that applies under s. 79(3)5. Thus, the total compensation payable by the Board is $1,375 (USD). The Board may pay that amount or its equivalent in Canadian dollars. The other claims made by the Appellant (rental cars, bus fare, gasoline, amongst others) do not fall into the category of the specific deficiency that is triggered by s. 79(3)5, in this case.
ORDER
Pursuant to the authority vested in it under the provisions of the Regulation, the Tribunal allows the Appellant's claim, in part, and directs the Board to pay the Appellant $1,375 (USD) or its equivalent in Canadian dollars.
LICENCE APPEAL TRIBUNAL
Richard Macklin, Vice-Chair
Released on: June 07, 2016