Kings Valley Paving Inc. v. Registrar of Motor Vehicles, 2016 CanLII 9451

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2016-01-12

FILE:

9573/CVOR

CASE NAME:

9573 v. Registrar of Motor Vehicles

Appeal under Section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8, from an Order of the Registrar of Motor Vehicles Pursuant to Section 17 - to Refuse to Issue a Commercial Vehicle Operator’s Registration Certificate.

Kings Valley Paving Inc.

Appellant

-and-

Registrar of Motor Vehicles

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Alex McCauley, Member

APPEARANCES:

For the Appellant:

Gordon Meakings, Counsel

For the Respondent:

Patrick Moore, Counsel

Heard in Toronto:

November 6 and December 21, 2015

REASONS FOR DECISION AND ORDER

The Appellant appeals to this Tribunal under section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8 (the “Act”), from an order of the Registrar of Motor Vehicles (the “Registrar”) issued on May 6, 2015 pursuant to section 17 to refuse to issue a Commercial Vehicle Operator’s Registration Certificate (“CVOR”).

BACKGROUND

The Appellant originally filed for registration in 2014. At that time, there were concerns about a relationship between the Appellant company and Kings Valley Interlock which had held a CVOR and was a concern to the Ministry due to its safety violation records. That CVOR has since been terminated, but prior to voluntarily surrendering the CVOR, the violation rate had climbed to 73.9%. Based on the safety record of Kings Valley Interlock Inc. a company related to the Appellant, the CVOR issued to the Appellant in March 2014 had a rating of “Conditional” with terms and conditions attached (Ex. # 3 page 20).

There were performance conditions attached. These stated that the CVOR would be subject to cancellation proceedings in the event that:

1. The overall safety violation rate exceeded 50% , or

2. A failed facility audit conducted by the Ministry of Transportation.

These conditions were put in place for one year.

The Ministry contends that the Appellant failed to comply with the conditions as stated. On January 15, 2015, the Appellant failed the facility audit. In addition, the overall violation rate was as high as 73% and after updating the records, the violation rate was pegged at 98%.

The Appellant’s position is that part of the problem is that the kilometer trip travel submitted is not accurate. The Ministry’s position is that even if the kilometric travel were to be adjusted, the overall violation rate would still have been in excess of 50%.

It is important to note that kilometer travel has no impact or influence upon the facility audit which the company failed.

The Registrar also submitted that since April 27, 2015, after its Notice of Refusal to Issue a CVOR, the Appellant has been operating in violation of the Act.

EVIDENCE

Christopher Austin, a facilities audit administrator, gave evidence with regard to the facility audit. He had no direct role in the audit. The auditor who had performed the audit, Mr. Travis Donahue, was not available to give evidence at the hearing due to an injury. Mr. Austin is familiar with this audit. His responsibilities include supervising and reviewing audits.

The date of the facility audit was January 14, 2015. At the time of this audit, the corporate officer, and principal, for Kings Valley Paving Inc. was Angelo Ferlisi.

Mr. Austin referred to the facility audit findings (Ex. 3, tab 10) in his testimony. On page 64, there is record of an exit interview conducted by the auditor which Mr. Ferlisi attended. The audit findings were explained in detail.

As outlined in the document, the audit was scored as a fail. The company was scored at 44.2%; in order to pass the audit the score must be greater than 55%.

The report indicates that the company was failing in the key areas which are indicated at page 51. The section indicating compliance rates is key.

In cross-examination, it was established that the information for the audit at the time of the initial interview would be supplied by the operator; this could be a staff member who is present at the interview.

David Mercanti is a program standards manager and carrier rating safety administrator with the Ministry. He explained his role and responsibilities as they relate to the oversight regarding the CVOR requirements for operators.

He explained that the purpose of the CVOR system is to ensure that heavy vehicles operate safely on the highway. The system identifies unsafe carriers by assigning points for at fault collisions, offenses and out of service defects. Carriers are given the maximum allowable point total based on the number of trucks they operate and the numbers of kilometers they travel annually on Ontario roads. Points are recorded against the maximum allowable number for a period of two years and expressed as a percentage of the maximum allowable violation rate (%VR). The system anticipates interventions for carriers whose VR is increasing. At 35%VR, a warning letter is generated. Currently 85% of carriers operate under 35% VR. At 50%, an audit is triggered and at 80% a carrier may be called in for an interview. Sanctions are usually imposed if the VR exceeds 100%. Approximately 0.1% of carriers, or approximately 50 out of 50,000 carriers, exceed 100%.

This information is available to companies on the Ministry’s website.

The kilometers travelled number is used to establish threshold values regarding collisions etc. This number can be corrected if conditions change.

The Appellant had indicated its kilometers travelled to be 30,000 on its original submissions to the Ministry, but subsequently re-worked the numbers to indicate 300,000 km travelled. These numbers were considered unreliable. Based on a review undertaken by Mr. Mercanti, and based on information received from Don Gillett the Appellant’s consultant, kilometers travelled was pegged at 251,193 (Ex. # 3 tab 15). The information used by Mr. Mercandi is outlined in tab 13 of Ex. # 3.

Evidence later showed that there were duplications, of vehicle registrations, submitted by the company. Mr. Gillett indicated that this was done in error. The registration certificates on pages 102 and 106 in exhibit # 3 are identical. This would take another 3 vehicles off the number used to calculate the kilometers travelled submitted by the company.

Even using these calculations which were thought to be an exaggeration by the Ministry, the company’s overall threshold rate was 50.89% still over the minimum required of 50%.

Mr. Mercanti stated that it was also determined by the Ministry that Mr. Ferlisi, was a corporate principal with another company, King Valley Interlock, which was originally issued a CVOR certificate on October 7, 2008.

Since March 2015, the Appellant has been banned from operating in Ontario, but yet there are still events taking place with a number of offences having been charged against the company since then. These are outlined at Ex. 4, tab10, pages 77 through 82, and show a variety of offences, many for operating without a valid CVOR.

Mr. Mercanti made it clear in cross-examination that a facility audit is not triggered necessarily by a company exceeding the safety threshold rate. It would not be unusual to have the audit completed based solely on the fact that the company was operating on a one year conditional CVOR, one of the conditions being that they pass a facility audit.

A facility audit has no relationship to kilometric travel.

Mr. Gillett is the Appellant’s consultant. He has extensive background within the industry having served 30 years with the Ministry of Transportation in a variety of positions.

He is a licensed paralegal and has defended the Appellant in court.

In his evidence, he stated that his concern is that the kilometric travel submitted by the company only reflected one vehicle and there were 16 in the fleet.

His calculation of the kilometric travel was based in part on estimates and also on mileages from annual safety certificates. He admitted the calculations included vehicles not weight rated for CVOR, but that they were in the process of applying to have these vehicles included.

In cross-examination, he admitted that the Appellant has been operating outside the law by operating without a CVOR. He continues to give advice to the Appellant in spite of the fact he is aware it is operating without a CVOR.

Mr. Gillett himself has not conducted an audit of the Appellant such as that completed by the Ministry.

He admitted that a vehicle registered to another company (owned by Mr. Ferlisi) had been submitted by him to increase the kilometric travel number.

When it was pointed out that the latest review of the company’s safety record, as illustrated on page 75 of Exhibit # 4, indicated that the Appellant’s safety rating was still seemingly out of control, he appeared to be somewhat ambivalent indicating that this was a minor fluctuation.

Mr. Ferlisi stated he employs approximately 50 people, some administrative and maintenance staff, drivers and laborers. His company provides asphalt paving. His drivers double as laborers. His market area is the GTA. The business slows down in the winter months with most staff laid off.

He is responsible for the CVOR application.

He stated that drivers are responsible for maintaining log books. He has augmented this by hiring a consultant to develop policies to ensure compliance.

Mr. Ferlisi stated that he has been treated unfairly by the Ministry. His CVOR should not have been conditional. He felt the numbers used to establish kilometers travelled were skewed against him.

In cross-examination, he stated he had sent a letter to the Ministry updating information. He could not produce any such documentation.

He admitted that on his application he had committed to ensuring compliance with the regulatory standards. He has failed to do this on several fronts, including poor reporting and poor maintenance. A lot of this, he blamed on staff for failing to report properly.

Mr. Ferlisi was aware that he was operating outside the law by operating without a CVOR. He admitted that he intentionally exposed his drivers to sanction for operating vehicles without a valid CVOR. His excuse was that economically it would be devastating for his company to stop operating in spite of not having a CVOR.

He sees the CVOR situation as no more than an administrative dilemma.

SUBMISSIONS

Mr. Moore submitted that the conditional CVOR was a reasonable move by the Registrar and that the conditions were fair and attainable.

He stated that the audit is a common action taken by the Ministry, especially in situations where there is a time limited condition.

It is clear that the facility audit has no relationship with the safety threshold factor based on kilometric travel.

The Registrar is critical of the company continuing to operate in violation of section 16(2) of the Act. It indicates a lack of respect for the law. The Appellant’s ’economic interests are subordinate to its legal obligations.

Remedial steps of any kind taken or attempted by the Appellant are of little worth in the face of a clear prohibition that it not operate.

In his submissions, Mr. Meakings maintained that had the Ministry applied correct numbers in the first place in all probability an audit would not have been triggered.

THE LAW

The statutory authority for the actions of the Registrar and the jurisdiction of the Tribunal are set out in sections 47, 47.1 and 50 of the Highway Traffic Act (the Act), as follows:

Suspension and cancellation of licence, etc., general

47. (1) Subject to section 47.1, the Registrar may suspend or cancel,

(a) the plate portion of a permit as defined in Part II;

… or

(c) a CVOR certificate,

on the grounds of, …

(f) the Registrar having reason to believe, having regard to the safety record of the holder or of a person related to the holder, and any other information that the Registrar considers relevant, that the holder will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety;

Power to seize number plates

(8.1) If the plate portion of a permit is suspended or cancelled under clause (1) (a), the Registrar may order that the plate portion of the permit or the number plates issued in connection with the plate portion of the permit be seized and any police officer or officer appointed for carrying out this Act may seize the plate portion of the permit and the number plates and deliver them to the Ministry.

Definitions, “commercial motor vehicle” etc.

(9) For the purposes of this section and section 47.1,

“commercial motor vehicle,” “operator” and “safety record” have the same meanings as in subsection 16 (1)..

Notice of proposed action, s. 47

47.1 (1) Before taking any action under clause 47 (1) (a) or (c) or subsection 47 (2), the Registrar shall notify the person whose plate portion of a permit or CVOR certificate is to be affected of his or her proposed action.

50. (1) Every person aggrieved by a decision of the Minister made under subsection 32 (5) for which there is a right of appeal pursuant to a regulation made under clause 32 (14) (n) or a decision of the Registrar under section 17 or 47 may appeal the decision to the Tribunal.

Powers of Tribunal

(2) The Tribunal may confirm, modify or set aside the decision of the Minister or Registrar.

ANALYSIS

The evidence provided a fulsome history of the Appellant’s CVOR record.

The Appellant had a conditional CVOR certificate that had been issued March 27, 2014. The CVOR was conditional for one year, with two performance conditions:

1. The overall safety violation rate shall not exceed 50%

2. The Appellant must pass a facility audit conducted by the Ministry.

The Appellant exceeded the overall violation rate. Even after numbers were manipulated, it still exceeded the 50% threshold.

In addition, the Appellant failed a facility audit on January 20, 2015, as outlined in Exhibit #3.

The conditional CVOR clearly indicated that the CVOR may be subject to cancellation proceedings if the conditions under which the CVOR was issued were not complied with.

In addition, the Appellant was given an opportunity to attend a show cause hearing on May 5, 2015. After that meeting, the Registrar chose to proceed with the Notice to Refuse Registration which was issued May 6, 2015.

The Appellant’s evidence, as presented by Mr. Gillett and Angelo Ferlisi, was fragmented and contained inaccuracies.

The evidence of Mr. Gillett as it related to his interpretation of the kilometers travelled statistic contained information that was invalid. For example, this information included kilometers taken from vehicles which do not qualify in the CVOR category and kilometers from an associated company’s vehicle. There was duplication of vehicle registration certificates submitted where kilometers were added for the travel.

Even so, Ministry officials used some of those numbers to re-work the company’s submission as to kilometers travelled, and even after that, the Appellant’s threshold rate still was over 50%, ending at 50.89%.

Further, on the issue of kilometers travelled, Mr. Gillett had communicated by e-mail to Mr. Mercanti regarding the Appellant’s fleet size (P.101 Ex. # 3). He indicated that the company had 20 trucks which was inaccurate; at the time of the audit, it had 10 trucks. Mr. Gillett admitted the number of 20 trucks was not accurate, he was forecasting fleet size.

Mr. Gillett never undertook an independent audit of the Appellant. He was not in a position to dispute the original audit findings.

The Tribunal did not find Mr. Gillett to be credible. He was determined to manipulate the kilometric travel numbers by submitting information that, based on his experience, he ought to have known was inaccurate.

Further, he was aware the Appellant was operating illegally, that is, without a CVOR certificate, but still continued to advise them on all matters.

Mr. Ferlisi, for his part, felt he was being treated unfairly by Ministry officials. He maintained that the audit was generated by the fact that the kilometric travel numbers originally were inaccurate, which increased the safety threshold level and triggered the audit. Yet, he could produce no evidence that he had attempted to correct the numbers. He stated he had sent a letter but could not produce any such letter. Furthermore, this position ignores the fact that the conditional CVOR called for a facility audit report.

He maintains that he has put persons in place to better control fleet management and protect his CVOR.

He has knowingly continued to operate his company without a CVOR in contravention of the law and has knowingly exposed his staff drivers to sanction by having them operate vehicles without a CVOR. His excuse being that to stop using his fleet would cause him to go bankrupt. The economic hardship would affect him directly as well as staff.

He views the action of the Ministry as merely administrative in nature, justifying his actions.

The Tribunal finds that the actions of Mr. Ferlisi and his company are irresponsible, to say the least. The Appellant’s’ safety record continues to deteriorate as illustrated in a later safety review as outlined on page 75 of Exhibit 4. Mr. Ferlisi adopted a laissez faire attitude to this information, which is not what one would expect from a person seeking to obtain a CVOR.

Based on the evidence, the reasonable inference to be drawn is that Mr. Ferlisi has displayed total disregard for the law as it applies to his obligations under the CVOR system. His attitude seemed to be that the Ministry’s requirements to ensure the safe and responsible operation of commercial vehicles on the highways were secondary to the Appellant’s financial success.

The Tribunal has no confidence that the Appellant will operate its commercial motor vehicles safely and in accordance with its obligations under the Act. The Tribunal noted no unfairness toward this Appellant. To the contrary, every opportunity was afforded to the Appellant to present its operations a positive way.

The granting of a conditional CVOR to the Appellant was appropriate under the circumstances; the Appellant was aware of its obligations under the conditional CVOR, yet took no steps to ensure compliance.

ORDER

Pursuant to the authority vested in it by section 50 of the Act, the Tribunal confirms the Registrar’s refusal to issue a Commercial Vehicle Operator’s Registration Certificate to the Appellant.

LICENCE APPEAL TRIBUNAL

_________________________

Alex McCauley, Member

Released on: January 12, 2016