Mr. Industrial Aid Ltd. v. Registrar of Motor Vehicles, 2016 CanLII 98147

Licence Appeal Tribunal

Date: 2016-10-24

File: 10466/MVIA

Case Name: 10466 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

Mr. Industrial Aid Ltd. Appellant

-and-

Registrar of Motor Vehicles Respondent

REASONS FOR DECISION AND ORDER

Adjudicator: Chantal Proulx, Vice-Chair

Appearances:

For the Appellant: Tim Kilbourne, Agent

For the Respondent: Sanjay Kapur, Agent

Heard by teleconference: October 17, 2016

REASONS FOR DECISION

A hearing was held on October 17, 2016, by teleconference, to consider the Appellant’s appeal according to section 50.2 of the Highway Traffic Act, R.S.O., 1990, c. H.8 (the “Act”).

According to section 50.2(5) of the Act, the Tribunal confirms the impoundment. As a result, the Appellant’s motor vehicle will continue to be detained at the impound facility for the remainder of the 45-day impoundment period.

BACKGROUND

The Appellant’s motor vehicle was impounded on September 19, 2016, pursuant to section 55.1 of the Act. The Appellant appealed to the Tribunal on two grounds: (1) due diligence was exercised in attempting to determine if the driver’s licence of the driver of the motor vehicle was under suspension, and (2) exceptional hardship.

The owner, motor vehicle, and date of appeal in this matter are as follows:

Owner: Appellant

Motor Vehicle: 2011, Chev CZZ

Date of Appeal: September 26, 2016

The Appellant is a small corporation. The Appellant’s Agent is the President of the company and the suspended driver was employed as a sales representative with the Appellant.

ISSUES

The Tribunal must decide two issues:

1. Should the Tribunal order the Registrar to release the motor vehicle on the basis 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 was not then under suspension?

2. Should the Tribunal order the Registrar to release the motor vehicle on the basis that the impoundment will result in exceptional hardship?

FACTS

Evidence for the Appellant

The Appellant is an industrial supply company. The majority of the company’s sales are generated by three sales representatives. They each have an assigned territory and they drive a company car. The driver of the motor vehicle that was impounded was the sales representative with the largest territory and he generated the highest revenue for the Appellant. Following the impoundment of the Appellant’s motor vehicle, the sales representative resigned from his position with the company. As a result, the Appellant now has twelve employees, of which two are sales representatives.

The Appellant’s Agent testified that the Appellant exercised due diligence by asking the sales representative for a copy of his driver’s licence and took his word that it was valid. In addition, the Appellant assumed that the insurance company the Appellant contracted to insure the motor vehicles would advise the Appellant if there was an issue with the validity of someone’s driver’s licence.

Regarding the ground of exceptional hardship, the Appellant’s Agent explained that three of the Appellant’s other motor vehicles are no longer on the road because they broke down and had to be scrapped. Furthermore, the Appellant could not afford to buy or rent another vehicle to replace the one that was impounded.

In cross-examination, the Appellant’s Agent stated that the Appellant’s annual revenues are just under $500,000, and the sales representative whose licence was under suspension generated approximately $275,000 in sales annually. The Appellant’s business was struggling one month before the motor vehicle was impounded. The impoundment of the motor vehicle added to the Appellant’s financial challenges because the sales in the territory serviced by the sales representative in question were down 60% in the last month. The Appellant’s Agent estimated that the Appellant lost about $30,000 since the impoundment of its motor vehicle.

The bank revoked the Appellant’s line of credit on October 17, 2016, therefore the Appellant no longer has the financial means to lease or purchase another motor vehicle to replace the one that was impounded. The Appellant is currently relying on its receivables to keep the business afloat. Currently, the weekly cash flow is negative.

The Appellant’s Agent indicated that as of very recently, revenues appear to be increasing. Furthermore, the Appellant is consulting a development bank regarding viable business options and is looking into different government programs to help the business.

Regarding the issue of due diligence, the Appellant’s Agent explained that he was unaware that he could require potential employees to provide their driving record abstract or obtain a copy of it himself. Since the motor vehicle was impounded, the Appellant has put a new policy in place that requires new employees who drive a company vehicle to provide a copy of their driving record abstract. The Appellant no longer relies on an individual’s word to ensure they have a valid driver’s licence.

In response to a question from the Respondent’s Agent, the Appellant’s Agent noted that the company is considering hiring another sales representative to cover the territory in question; however, the potential employee requires a motor vehicle, which the Appellant cannot afford at this time. Therefore, there is no firm date for the individual to start working for the Appellant.

Regarding the Appellant’s attempt to replace the impounded vehicle, the Appellant’s Agent explained that the Appellant was turned down on three separate occasions when it tried to lease or buy another motor vehicle. Furthermore, when it inquired about the cost of renting a motor vehicle without a limit on mileage, the Appellant’s Agent explained that the cost was prohibitive, being approximately $200 a day. Given the Appellant’s current cash flow and the lack of a line of credit, the Appellant’s Agent stated that renting a motor vehicle during the period of the impoundment was not a viable option.

Evidence for the Registrar

The Registrar filed written submissions with the Tribunal on October 7, 2016. These documents, which contain information relating to the impoundment of the vehicle, were admitted into the record on consent of the Appellant’s Agent. The documents are as follows:

1. A copy of the Notice to Registrar indicating that the Appellant’s motor vehicle was impounded on September 19, 2016;

2. A copy of the Ministry of Transportation records concerning the driver of the motor vehicle when it was impounded, indicating that his driver’s licence has been suspended;

3. A copy of the Ministry of Transportation plate search for the impounded vehicle;

4. A copy of the Notice of Impoundment; and

5. Copies of the plate searches for vehicles registered to the Appellant.

LAW

Section 55.1 of the Act provides that a motor vehicle may be detained and impounded. Subsection 55.1(3) of the Act states:

3. A motor vehicle detained under subsection (1) shall be impounded as follows:

1. 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.

2. 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.

3. 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 owner of a motor vehicle that is impounded may appeal the impoundment to the Tribunal; however, the owner may only appeal on four specific grounds set out in subsection 50.2(3) of the Act.

(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.

The Appellant appeals on the grounds set out in paragraphs 50.2(3)(c) and (d).

According to subsection 50.2(5) of the Act, on appeal the Tribunal may confirm the impoundment or order the Registrar to release the motor vehicle. According to subsection 50.2(8) of the Act, the decision of the Tribunal is final and binding.

1. Due diligence

“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.

2. Exceptional hardship

The Shorter Oxford English Dictionary, 3^rd ed. defines “exceptional” and “hardship” as follows:

Exceptional: Of the nature of or forming an exception; unusual.

Hardship: 1. The quality of being hard to bear; hardness; severity. 2. Hardness of fate or circumstance; severe toil or suffering; extreme privation.

According to subsection 50.2(4), an individual cannot appeal on the ground of exceptional hardship if any of their previous motor vehicles had been impounded under section 55.1 in the past.

Section 10 of Ontario Regulation 631/98 sets out the criteria that can and cannot be considered when determining if there is exceptional hardship. First, the Tribunal must consider if no alternative exists for the impounded vehicle.

If there is no alternative, then the Tribunal must consider if the impoundment will result in a threat to the health or safety of any person ordinarily transported by the motor vehicle or a threat to public health and safety or to the environment or property of a community in whose service the vehicle is ordinarily used.

Generally, the Tribunal may not consider:

• financial or economic loss to any person,
• loss of employment or employment opportunity to any person, or
• loss of education or training.

However, the Tribunal may consider the above types of losses if the owner of the motor vehicle demonstrates all of the following:

• there is no alternative to the vehicle available,
• the loss will be immediate, significant and lasting,
• the impact will be on a person ordinarily transported by the vehicle, and
• the impact of the loss will be on someone other than the suspended driver and will not be the result of a loss by the suspended driver of the type described above.

According to subsection 10(4), to show that no alternative to the impounded motor vehicle is available, the Appellant must demonstrate that every reasonable option has been considered and inquired into, that could eliminate or adequately mitigate any threat or loss, including using another vehicle and making arrangements to do without any motor vehicle during the period of the impoundment.

The regulation states that the Tribunal cannot consider inconvenience to any person as being exceptional hardship.

APPLICATION OF LAW TO FACTS

The Appellant has the onus to prove its appeal on a balance of probabilities.

Due diligence

The legislation requires the owner of a motor vehicle to make reasonable efforts to determine if the licence of the person who drives the owner’s vehicle is valid. To rely on a defence of due diligence, an Appellant must demonstrate that reasonable steps were taken to determine the validity of an individual’s driver’s licence before allowing that individual to drive.

According to the testimony of the Appellant’s Agent, the Appellant had no specific practice or policy in place to assess the validity of an employee’s driver’s licence. The company obtained a copy of the employee’s driver’s licence, accepted the word of the sales representative that his driver’s licence was valid and assumed that the insurance company would advise the Appellant if there was a problem with the validity of an employee’s driver’s licence.

The Respondent’s Agent submitted that the Appellant did not demonstrate due diligence because the company did not have a policy of verifying the validity of employee’s drivers’ licence.

The Tribunal finds that the Appellant did not exercise due diligence in this particular case. Considering the nature of the Appellant’s business and the fact that the Appellant provides its sales representatives with a motor vehicle to cover their territory, it was not sufficient to simply rely on the word of the sales representative and obtain a copy of his driver’s licence. Obtaining a copy of a driver’s licence is not sufficient to ensure it has not been suspended. Not having a policy in place and relying on the insurance company, without clear instructions or an understanding of what information the insurance company would verify, does not amount to due diligence. Therefore, the criteria prescribed under section 50.2(3)(c) of the Act have not been met and the appeal on this ground fails.

The Tribunal acknowledges the Appellant’s positive initiative, following the impoundment, of adopting a policy that potential new employees will be asked to provide a copy of their abstract driving record or the Appellant will obtain one itself.

Exceptional hardship

According to section 10 of Ontario Regulation 631/98, when deciding if exceptional hardship will result from an impoundment under section 55.1 of the Act, the Tribunal must first consider if no alternative exists for the impounded motor vehicle.

The Appellant’s Agent acknowledged that there are currently two motor vehicles registered to the Appellant and that they are both used by sales representatives. The Appellant’s Agent explained that the Appellant requires a third motor vehicle to cover its other sales territory, and indicated that the Appellant did not have the financial means to rent or purchase a vehicle.

The Respondent’s Agent submitted that the Appellant’s motor vehicle should not be released early because the Appellant failed to establish exceptional hardship as defined in the Regulation. The Respondent’s Agent noted that the Appellant had other motor vehicles, the Appellant’s sales were declining before its motor vehicle was impounded, and its sales had picked up recently. Lastly, the Respondent’s Agent argued that assuming the cost of renting a motor vehicle was $200 a day, it appeared to be a small price to pay compared to the monthly loss of $30,000 in revenue.

For the reasons that follow, the Tribunal finds that the Appellant has not demonstrated, on the balance of probabilities, that there is no alternative for the impounded motor vehicle.

First, the Appellant has two other motor vehicles that are currently used by the two remaining sales representatives. The Appellant’s Agent confirmed that on occasion he asked his other sales representatives to cover the sales territory that was no longer serviced. In addition, some of the sales were handled by telephone calls.

Second, while the Appellant may be experiencing financial challenges, the Tribunal finds that the Appellant failed to demonstrate why it was not reasonable to rent a motor vehicle, even if it was not during the entire duration of the impoundment, to recoup at least some of the lost revenue.

The Tribunal finds that although it may not be an ideal situation, the Appellant has an alternative to the impounded vehicle. Therefore, the Tribunal finds that the Appellant cannot succeed on the ground of exceptional hardship.

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.

LICENCE APPEAL TRIBUNAL

_______________________

Chantal Proulx, Vice-Chair

Released: October 24, 2016