1526302 Ontario Inc. o/a S.P. Freight Systems and 2325655 Ontario Inc. v. Registrar of Motor Vehicles, 2017 CanLII 17552

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2017-02-08

FILE:

10444/CVOR

CASE NAME:

10444 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 47 - to Cancel the Commercial Vehicle Operators’ Registration Certificates and to Seize the Plate Portion of all Permits Issued

1526302 Ontario Inc. o/a S.P. Freight Systems CVOR # 155-085-372 and 2325655 Ontario Inc. CVOR # 173-522-191

Appellants

and

Registrar of Motor Vehicles

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Alex McCauley, Member

APPEARANCES:

For the Appellants:

Sharanjit Poonia, Agent

Rajvinder Singh, Agent

For the Respondent:

Patrick Moore, Counsel

Heard in Toronto:

January 11 and 12, 2017

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 August 25, 2016 pursuant to section 47(1) to cancel the Commercial Vehicle Operators Registration (“CVOR”) certificates and to seize the plate portion of any permits issued.

BACKGROUND

The cancellation and seizure order referred to was made against two companies: 1526302 Ontario Inc. o/a S.P. Freight Systems (“152”) CVOR # 155-085-372 and affiliated company 2325655 Ontario Inc. (“232”) CVOR # 173-522-191. The issue in this case is whether these two companies are “related” within the meaning of the Act such that the safety record of one company should be attributed to the other company in determining whether the Registrar has reason to believe that the holder of the CVOR certificate will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety.

The principal of 232 is Parminder Kundhal, the sister of Sharanjit Poonia, the principal of 152. She had not attended any of the proceedings, and withdrew her appeal of the order against 232 on January 13, 2017. The matter involving 232 Ontario Inc. is hereby concluded.

The hearing concentrated on the actions of 152, and where relevant, the involvement and connection to 232.

Mr. Poonia has owned 152 since 2009. He has also been involved with 232 and held management positions there.

Safety violations between 2009-2011 at 152 resulted in a 7-day suspension imposed by the Ministry, and conditions.

The Ministry of Transportation provided an opportunity to Mr. Poonia on September 21, 2011 to appear before the Deputy Registrar and “show cause” why the Ministry should not take enforcement action against him. As a result, Mr. Poonia of 152 chose to reduce its fleet size from 11 commercial motor vehicles to two, in order to make management of the fleet more practical and lower the safety violation rate (VR).

It was around this time that the other company, 232, owned by Mr. Poonia’s sister, started operation. The company was being managed by Mr. Poonia. The violation rate (VR) began to rise at 232 and the company narrowly passed a facility audit. In 2013, the VR was 84.80%.

In 2016, in response to the high violation rate at 232, there was a transfer of vehicles and personnel back to 152.

On August 25, 2016, the Registrar cancelled the CVOR certificates of 152 and 232, and ordered the plate portion of any permits issued to be seized.

THE EVIDENCE

Sherry Atallah, a Ministry of Transportation carrier rating administrator, gave evidence. Ms. Atallah has held this position since 2001. She is responsible in part for reviewing sanction files, refusing or approving CVORs, resolving rating disputes and attending Ministry “show cause” hearings with the Deputy Registrar.

Ms. Atallah described the CVOR system. The CVOR system is designed to track the on road performance of Ontario-based carriers and identify those carriers that may present a safety risk. The CVOR system tracks three parameters that have been found to be indicia of safe operation: collisions, convictions and inspections by an officer of the Ministry of Transportation (MTO). A CVOR holder notifies the MTO on registration, and thereafter at least annually, of its fleet size and kilometric travel in Ontario. Based on these two factors, it is assigned a maximum number of points, referred to as its violation rate (VR).

The Registrar tracks each CVOR holder’s performance by measuring its actual points against the assigned maximum and expressing it as a percentage of the VR. To determine a carrier’s VR, each parameter is tracked separately and then weighted to give an overall number. The tracking system contemplates intervention by the Registrar at certain predetermined levels. At 35% VR, a carrier receives a warning letter advising it that its record is deteriorating and advising it to make adjustments to improve. At 50% VR the Registrar may initiate a facility audit. A carrier may be called for an interview at 80% and the Registrar will consider sanctions when a carrier reaches 100%. Sanctions may range from suspension to revocation. Ms. Atallah stated that 95% of carriers operate under 35% VR, and only 1% are over 80% at any given time, and 0.2% exceeds 100%. In other words, about 100 carriers in Ontario out of 50,000 exceed 100%.

Ms. Atallah’s attention was drawn to the companies managed by Mr. Poonia when she became aware in August 2016 (Ex. 4 tab 6) of the violation rate for 232, which was 129.45%.

In May 6, 2013, a Facility Audit had been conducted on 232. The result was a violation rate of 84.80%. Mr. Poonia had attended the Facility Audit. The company passed the audit, but barely

On August 18, 2016, there was a “show cause” hearing with the Deputy Registrar to examine the two companies in light of the high VR of the companies. At that meeting, Mr. Poonia provided documentation authorizing him to represent 232 as well as his own company. He advised at that meeting that 232 had stopped operating at that time. Mr. Poonia advised he had been managing both companies since 2012.

It was noted that in 2016, many of the trucks and drivers from 232 were transferred to 152 (Mr. Poonia’s company), as 232 had ceased operations. The VR had been an issue since 2009 and came to a head in 2011 when the CVOR of 152 was suspended. At that time, the VR of 152 was 109.62%. He reduced his fleet size but then shuffled equipment and personnel over to 232, his sister’s company which had just started up.

Under the circumstances, Ms. Atallah evaluated the VR in relation to both companies. The overall VR for the 24 month performance summary was 129.45%. The poor rating was the result of at fault collisions, convictions and safety inspections (Ex. 4 tab1 pages 1 & 2). There were 46 convictions, of which 38 were rated against the CVOR. In the same time period, there were 15 collisions, with 7 of those incurring points against the CVOR.

In May 2016, a facility audit was attempted at 232 but had to be abandoned because the auditor was unable to contact the operator. It then became apparent that 152 had taken over the operation of 232.

A review of the operator record for 152 showed a VR of 15.43%; this only covered activity from January to December 2016. Many of the violations were of concern to the Ministry, such as collisions, speeding, and log book violations.

Ms. Atallah’s concern was the high violation rates of both companies while under the same management. The violation rates were the result in many instances of at fault collisions, and also log book violations. These are serious safety concerns on the part of the Ministry.

There was no significant change of plan presented at the “show cause” meeting in August 2016. There was no new action plan proposed.

The carrier performance report presented by the Registrar shows an overall VR of 41.94% against 152 for the period of January to December 2016 (Ex. 10).

It is the opinion of Ms. Atallah that based on the records of the companies managed by Mr. Poonia, there has been no positive improvement and the VR even in the short term continues to be high.

After the August 2016 “show cause” meeting, the Ministry issued a cancellation and seizure order against 152 and 232, effective September 12, 2016.

Mr. Poonia chose to accept the Ministry’s evidence and did not cross-examine the witness, Ms. Atallah.

Aslam Hayat, the human resources and safety and compliance manager for 152, gave evidence on behalf of the Appellant. He has a Master’s degree and Ph.D., and has been involved in the trucking industry since 2005, including having taken many safety courses and being qualified in hours of service requirements, and also qualified to train drivers on the transportation of dangerous goods. He indicated that he had previously worked for Mickey Transport in B.C., where he managed safety on behalf of the company, and attended safety audits on behalf of the company, and the outcomes were positive.

In August 2015, he was employed by 152 as a safety and compliance officer with authority over all the systems. He familiarized himself with the current policies and procedures, including the proper use of log books. He made it a policy that all drivers must be exclusive to 152; they were not permitted to “job out”, that is, to accept outside contract work. He ordered monthly CVOR reports and met with drivers individually. At these meetings, they would discuss preventative maintenance procedures and drivers would sign off on the reports. Part of his duties included monitoring driver log books, and he used a software tool to track log book activities.

He tracks violations that are listed against drivers, and if in his opinion the violations are not warranted, he will fight that charge. He questioned the reports on some of the collisions, one specifically on August 14, 2016, where the cause was stated to be driver fatigue. He disputed this, stating that the driver had said he had stopped for coffee 45 minutes before, and he could not be fatigued. He places the cause on a steering malfunction.

In cross–examination, Mr. Hayat could provide no information on the affiliated company 232. When asked about 16 drivers having been transferred from 232 to 152, he stated he did not know the history. He denied knowing anything about 232.

He stated that none of the drivers he hired were recommended by Mr. Poonia. He denied being concerned about hiring so many drivers from a company with a VR of over 100%. He stated he just tried to establish if the driver was good. He admitted that some drivers had recurring safety and log book violations. In these cases, he stated that warning letters were given to those drivers.

One of the drivers hired from 232 was H.S., and he had many violations, with the last one reported from an inspection on December 22, 2016 (Ex. 8), which indicated six violations on that date. Mr. Hayat stated he had hired H.S. and that he was not recommended by Mr. Poonia. He fired H.S. on January 3, 2017, because of his repeated safety violations.

In regards to a collision that occurred on April 3, 2016 (Ex. 4, tab 15, p. 227), the officer had concluded that the operator of the tractor trailer was travelling too fast for conditions. It was Mr. Hayat’s opinion that the operator was proceeding properly and the actions of the other motorists caused him to take the evasive action which led to the collision.

Mr. Hayat stated that getting safety meetings with all drivers at once is virtually impossible as many are out of province. So the company doesn’t conduct safety meetings. They have individual meetings with driver/operators. There are no real incentives for good performance; an appreciation letter may go in a drivers file, or Mr. Poonia may offer a cash reward but he doesn’t know about these.

Mr. Poonia is a principal of 152. In his testimony, he stated that the last CVOR record he had (Ex. 9) indicated a VR of 23.9% for the last 24 months. This is in stark contrast to the Ministry’s documentation (Ex. 10) which showed an overall VR of 41.94% for the performance period of January 1 to December 4, 2016.

He stated that he realized that 232 had a high VR. In mid-December of 2015, he and his sister, the owner of 232, had a dispute. He stated he attempted to make changes to reduce the VR of 232.

When the Registrar’s Counsel suggested on cross-examination that his record as a manager was less than acceptable, he countered by saying he was limited in what he could do. His sister ran the company. Mr. Poonia denied taking over 232, and said instead that the personnel there chose to join his company.

Registrar’s Counsel in submissions points to the poor VR rates of both companies 232 and 152. All of these companies sustained these high rates while under the management of Mr. Poonia. Counsel pointed to the previous suspension of 152 in 2013. There has been no indication of improvement. The violations recorded against both companies are very serious and negatively impact the safety of motorists on the public roadways. There has been no new plan presented that would indicate a new pathway to safety. Suspension and cancellation of the CVOR for 152 is required in order to ensure safety on the roadways.

Mr. Poonia stated he was only an independent operator (a jobber) at 232, and that the companies’ bad record should not be attributed to him. His prime objective is to keep safety a priority in 2016. He stated that the economic hardship for him and staff if he loses his CVOR will be devastating.

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.

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 Tribunal finds that 2325655 Ontario Inc. and 1526302 Ontario Inc. o/a S.P. Freight Systems are related companies within the meaning of s. 47(1)(f) of the Act. This means that the safety record of one company may provide reason to believe that the other company will not operate a commercial motor vehicle safely, and the CVOR certificate or plate portion of the permit may be cancelled accordingly.

The evidence is clear that Mr. Poonia has had a significant involvement with both companies. He has had management responsibilities with 232, and management and direct ownership of 152. Furthermore, much of the equipment and personnel from 232 was transferred to 152. Mr. Poonia’s sister has had very little direct management of her company. Any evidence presented pointed to Mr. Poonia as the chief management figure in her company.

Ms. Kundhal did not even attend the Ministry audit in 2013 or the “show cause” hearing in August 2016, instead giving authority to Mr. Poonia to act on her behalf. Based on all of this, the Tribunal concludes that Mr. Poonia should be treated as the managing officer of both companies and that the two companies are related.

The safety record of 152 originally was poor, as early as 2010 (Ex. 4 tab 17), with warning letters sent to the company, care of Mr. Poonia, warning of unacceptable performance of the CVOR. This ultimately led to a suspension in 2011. At that time Mr. Poonia reduced the size of his fleet in order to better attempt to control his VR.

After 232 commenced operation under the ownership of Mr. Poonia’s sister, he increased the fleet size in 232 while leaving his company’s fleet at two trucks.

The VR began to rise for 232, culminating with an overall VR of 129.62% in a 23-month period from June 1, 2014 to May 31, 2016.

In 2013, a Facility Audit was conducted at 232, which indicated a VR of 84.80%. 232 passed the audit but barely. The indications were that VRs were out of control. Ms. Kundhal did not attend the audit, authorizing instead Mr. Poonia to act for her.

In 2015, 232 ceased operation, and fleet and drivers were funneled into Mr. Poonia’s company, 152. The Ministry’s concerns were initially sparked by 232’s high VR. Closer examination indicated that the two companies appeared very connected. One company’s operations was simply shifting to another corporate entity.

It is the finding of the Tribunal that this is no more than a sophisticated “shell game” to avoid Ministry sanctions and interventions. When things seem to get out of control with one company, everything is moved to the other company. There is no indication of any improvement of either company’s VR under Mr. Poonia’s management.

Mr. Hayat, although seemingly qualified, stated he had no knowledge of the workings of 232, in spite of the fact that he hired most of their drivers for 152 and transferred their rolling stock to 152. Under the circumstances, the Tribunal has difficulty believing the testimony of Mr. Hayat. It is not credible that he would have had so little knowledge of the affairs of 232 and its impact on 152.

It is noted that Mr. Poonia did not dispute the evidence of the Registrar, except in the difference of opinion on the last CVOR safety rating. In that instance, the Tribunal accepts the findings of the Ministry.

The high VR for both companies has been an ongoing concern for the Registrar. There has been no significant change to the companies’ operations. The Registrar is concerned that the ongoing operation of 152 will not improve. This has been evidenced by the latest carrier performance analysis report which showed a VR of 41.94% for a period of January to December 2016 (Ex. 10). This rate is high for 12 months, and if extrapolated over 24 months, it shows a serious VR for the company. Furthermore, the high VR rate for 232, which triggered the Ministry’s investigation, is reflective as well of the Ministry’s assessment of the performance of 152.

Mr. Poonia advised that the loss of his CVOR will be devastating economically to not only him but his staff. The Tribunal is mindful of the economic downside, but is also mindful of the purpose of the legislation, which is to protect the public by ensuring only safe carriers can operate heavy trucks on the roadways. The Tribunal supports this view, which was stated in paragraph 32 of Day and Night Cargo vs. Registrar of Motor Vehicles, [2016] O.L.A.T.D. No. 114 (Licence Appeal Tribunal).

It is the finding of the Tribunal that there has been no significant change in the management of the companies involved and this has been a recurring fact since 2010. These two companies are related and the Registrar is entitled to consider the safety record of 232 for the purposes of assessing whether to suspend the CVOR of 152. The evidence clearly shows that, having regard to the safety record of both 232 and 152, the Registrar has reason to believe that 1526302 Ontario Inc. will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety.

ORDER

Based on the evidence and pursuant to the authority vested in the Tribunal under s. 50(2) of the Act, the Tribunal confirms the cancellation and seizure order, dated September 12, 2016 against 1526302 Ontario Inc. o/a S.P. Freight Systems and dismisses the appeal.

LICENCE APPEAL TRIBUNAL

______________________

Alex McCauley, Member

Released: February 8, 2017