Licence Tribunal
Appeal d'appel en
Tribunal matière de permis
2017-03-14
FILE:
10178/REBBA
CASE NAME:
10178 v. Registrar, Real Estate and Business Brokers Act, 2002
Appeal from a Proposal of the Registrar under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C to Refuse Registration
Rafi Gilani Syed Mohammed
Appellant
-and-
Registrar, Real Estate and Business Brokers Act, 2002
Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATORS:
Patricia McQuaid, Vice-Chair, presiding
Avril A. Farlam, Vice-Chair
APPEARANCES:
For the Appellant:
Hans Kalina, Counsel
For the Respondent:
Maya Sabharwal, Counsel
Heard in Toronto:
February 14, 2017
REASONS FOR DECISION AND ORDER
BACKGROUND
This is a hearing before the Licence Appeal Tribunal (the "Tribunal") arising out of a
Notice of Proposal issued by the Registrar, Real Estate and Business Brokers Act, 2002 (the "Registrar" and the "Act" respectively). The Notice of Proposal dated April 4, 2016 (the "Proposal") proposes to refuse to register Rafi Gilani Syed Mohammed (the "Appellant") as a salesperson under the Act.
There are three grounds for the Proposal which can be summarized as follows:
Having regard to the Appellant's financial position, the Appellant cannot reasonably be expected to be financially responsible in the conduct of business;
The past conduct of the Appellant affords reasonable grounds for belief that the Appellant will not carry on business in accordance with law, integrity and honesty; and
The Appellant made a false statement on the application for registration.
The Appellant's position is that the Notice of Proposal is unfair and unreasonable.
THE EVIDENCE
Registrar's Evidence
The facts are not in dispute and are substantially a matter of public record. The Registrar filed a Book of Documents which establishes the following facts. The Appellant was registered with the Ontario Motor Vehicle Industry Council ("OMVIC") as a motor vehicle salesperson. The Appellant and his son, Umair Gilani ("Appellant's son"), operated several motor vehicle dealerships at various times, including Gilani's International Limited o/a Imperial Used Car Canadian Services ("Imperial"). The Appellant's son was also a motor vehicle salesperson.
The Appellant, as an officer and director of Imperial, was charged under the Retail Sales Tax Act for failure to collect and remit GST and PST from July 2003 to March 2007 ("CRA conviction"). The tax collected and not remitted was $183,036.54. The Appellant pleaded guilty on February 16, 2010 and was fined $100,000, payable over 12 months. The fine has not yet been paid in full.
On December 10, 2010, the Registrar, Motor Vehicle Dealers Act ("MVDA") issued a Notice of Proposal (the "OMVIC Proposal") to revoke the registration of the Appellant and of the Appellant's son and to refuse the registration of a dealership known as Imperial Fine Cars Inc. The Appellant did not file an appeal of the OMVIC Proposal in time and as a result, his registration as a motor vehicle salesperson was revoked on December 29, 2010. The Appellant has not been legally able to trade in automobile sales since December 29, 2010.
On May 4, 2011, the Appellant personally made an assignment in bankruptcy and listed various business creditors on his Statement of Affairs.
The Appellant was charged under the Provincial Offences Act for trading in motor vehicles without being registered under the Motor Vehicle Dealers Act, 2002 between March 9, 2013 and October 15, 2013. The Appellant pleaded guilty on December 2, 2014 and was fined $10,000 payable over one year and given a two year probation order. The fine has not yet been paid in full.
The Appellant applied to be a motor vehicle salesperson on March 15, 2013. By Notice of Proposal dated April 7, 2014, OMVIC proposed to refuse registration of the Appellant as a motor vehicle salesperson under the Act. The Appellant did not appeal.
On April 30, 2015, the Appellant submitted an application for registration as a salesperson under the Real Estate and Business Brokers Act, 2002. The Appellant initially answered "No" to question 7 on the application, which states as follows:
"7. Are there currently any charges pending, or have you been found guilty, pleaded guilty to, or been convicted of an offence under any law?"
The Appellant corrected his answer to indicate "Yes" on May 4, 2015.
On April 4, 2016, the Registrar issued a Notice of Proposal to Refuse Registration based on the above facts and Sections 10 (1) (a) (i), (ii) and (iii) of the Act.
The Tribunal heard testimony from Angela Volpe, Manager of Registration at the Real Estate Council of Ontario ("RECO"). Ms. Volpe testified that she reviewed the Appellant's application for registration. She stated that the disclosure questions are the most important on the application in terms of assessing an applicant's fitness for registration. Question 6 on the application is as follows:
"6. Have you had a registration and/or licence or professional status of any kind refused, suspended, revoked, or cancelled and/or have you been involved in any proceeding during which you resigned a registration or licence or professional status of any kind, or are there any proceedings pending. If yes, refer to Page 3 for Completion Instructions."
The Appellant answered "Yes" and attached a separate page adding to question 6 the following:
"Syed Mohammed Rafi Gilani's OMVIC's license for car dealer ship was not renewed due to improper paperwork, some areas of the paper were not filled out appropriately or due to taxes."
Ms. Volpe testified that this was more than just improper paperwork and taxes and that in fact OMVIC's Notice of Proposal to Refuse Registration dated April 7, 2014 listed a number of issues including the two criminal convictions, the resulting fines, the Appellant's unlicensed trading in motor vehicles and the Appellant's bankruptcy. Ms. Volpe stated that there is a concern on the part of the Registrar that the Appellant had been involved in a business which was not making the proper remittances to the government and that this went on for a long period of time and involved a large amount of money.
Ms. Volpe testified that there has been a bankruptcy and fines from the criminal convictions remain outstanding. She stated that it is concerning to receive an application with this many financial issues. Ms. Volpe summarized the Registrar's concerns as being revocation from another regulatory authority, a false statement only corrected five days later, trading without the benefit of registration in another regulated business and financial concerns, including the unpaid fines. Ms. Volpe expressed concern about the Appellant being in a regulated profession because of his past conduct and the Appellant's inability to comply with rules in a regulatory environment.
Ms. Volpe confirmed that the Registrar has not made this decision lightly. Conditions were considered, but because of the Appellant's past conduct, the Registrar cannot monitor the Appellant to make sure he is doing what he is supposed to be doing, nor can it impose responsibility for monitoring the Appellant on someone else. Further, she noted that a real estate salesperson works independently and the transactions involve large sums of money.
The Tribunal also heard testimony from Thaya Gengatharan, Manager of Registration at OMVIC. Ms. Gengatharan identified the OMVIC Notice of Proposal to Refuse Registration dated April 7, 2014. She confirmed the Appellant did not appeal.
She explained that OMVIC was concerned about the unsatisfied judgment against the Appellant and the court-ordered collection. Ms. Gengatharan stated that on his last application, the Appellant had failed to disclose he had been charged for working as a salesperson without being registered.
The Appellant's Counsel did not cross examine the Respondent's witnesses.
Appellant's Evidence
The Appellant testified that initially he incorrectly answered question 7 on the application. He stated that he did not understand this particular question and that when he realized the whole meaning, he corrected his answer and explained what happened. He said this was his error. The Appellant said that he got a phone call from the Registrar telling him the answer to question 7 should be yes. It was corrected four days later when he sent in a new first page of the application on May 4, 2015.
The Appellant testified that he is not working at the moment. He lives with his wife, two sons and his daughter-in-law. His wife is a teacher. He testified that he has tried to make changes in his life. He does volunteer work three or four days a week at his mosque and attends religious classes four to five days a week. The Appellant submitted a letter dated January 30, 2017 from Jamia Islamia Canada confirming his involvement at the mosque.
The Appellant explained that he plead guilty to the charge of failing to remit tax and was fined $125,000. He stated that it was a bad time for him and he couldn't pay it. He is still continuing to pay with the help of his wife. The Appellant testified that he is paying because he does not want to go to jail. The Appellant stated that the balance now is only $54,435 and submitted a statement showing this amount owing.
The Appellant said he filed for bankruptcy because his lawyer told him it was better to go bankrupt. The total debts were $580,000.
The Appellant testified that he plead guilty on the other criminal charge relating to the taxes not submitted and was fined $20,000. The Appellant stated he has paid over $10,000; the balance owing is now $9705. He submitted a statement confirming this amount.
The Appellant testified that he was convicted of selling a car when not registered to do so. He stated that it was a car which they owned. He was fined $15,000 and has an extension until June, 2017 to pay this.
The Appellant did a course and exam to be a mortgage agent and submitted his certificate of completion dated June 27, 2010. He stated that he has been unable to find a job because of the 2010 conviction and related tax problems. The Appellant completed a business manager certificate from Automotive Training Centre dated November 19, 2010 and submitted this certificate. He testified that he applied to OMVIC again when he got this, but was refused. He confirmed he did not appeal that refusal to the Tribunal. The Appellant also completed a Travel Industry Council of Ontario ("TICO") course in 2014 and submitted his certificate. He applied for registration as a travel agent, but withdrew his application when TICO advised his application would not be approved and it would be better for him if he withdrew it.
The Appellant testified that he now has applied for a real estate licence. He stated that ReMax Performance Realty Inc., Brokerage ("ReMax") has agreed to hire him and that the broker of record has agreed to supervise him if the Tribunal grants his registration with conditions. He submitted a document dated January 26, 2017 to confirm the arrangement. He stated that the brokerage is aware of his history. The brokerage will submit all applicable taxes on his behalf. Eighty percent of any commission will go to the Appellant who will pay the brokerage $450 per month. The Appellant stated that he is willing to be supervised in order to be employed.
The Appellant admitted that the behaviour that led to one of his convictions continued from March to October, 2013 and did not involve just a single transaction. He also admitted that there was more than one car sold when he was not registered. There were three or four cars. The Appellant confirmed that the list of creditors in the bankruptcy shows money owing to the Ministry of Revenue for corporate tax of $406,929.78.
The Appellant did not call any other witnesses.
ISSUE
The Tribunal must decide whether or not the Appellant has met the requirements to apply for registration as a salesperson under Section 10 (1) (a) of the Act.
THE LAW
The entitlement to registration and possible grounds for refusal are set out in section 10 of the Act as follows:
- (1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,
(a) the applicant is not a corporation and,
(i) having regard to the applicant's financial position or the position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,
(ii) the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty, or
(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration;
Section 10 (1) of the Act establishes that there is a presumptive right to registration if the Appellant has met the prescribed requirements. The presumption may be rebutted if the Registrar can prove, on a balance of probabilities, that the Appellant falls within one of the grounds outlined in section 10 (1) (a) (i), (ii) or (iii). The application of the statutory test under section 10(1)(a)(ii) requires the Tribunal to examine the Appellant's past conduct as a whole.
Section 13 of the Act sets out that the Registrar may refuse to register an applicant:
- (1) Subject to section 14, the registrar may refuse to register an applicant or may suspend or revoke a registration or refuse to renew a registration if, in his or her opinion, the applicant or registrant is not entitled to registration under section 10.
Section 14 sets out the powers of the Tribunal:
- (5) If a hearing is requested, the Tribunal shall hold the hearing and may by order direct the registrar to carry out the registrar's proposal or substitute its opinion for that of the registrar and the Tribunal may attach conditions to its order or to a registration.
ANALYSIS
Based on the evidence, the Tribunal does not find that the Appellant made a false statement or provided a false statement in his application for registration within the meaning of section 10 (1) (a) (iii) of the Act. Although the Appellant initially failed to answer question 7 on the application for registration correctly, when this error was brought to his attention by the Registrar's staff, it was corrected within a few days and the Appellant did disclose his CRA conviction as required.
The remaining issues before the Tribunal are:
i. Whether the Appellant's financial position is such that he cannot reasonably be expected to be financially responsible in the conduct of business; and
ii. Whether the Appellant's past conduct affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty.
Based on the evidence before the Tribunal, it is clear that the Appellant is in an unfortunate financial position, because of his past issues. Although the Appellant has paid some of his fines, he still owes $54,435 and $9705 in respect of the tax convictions. The Appellant is unemployed and does volunteer work. His attempts to obtain employment in other regulated fields of endeavour have been unsuccessful even though he has passed the Combined Travel Counsellor and Supervisor/Manager exam as required by the Travel Industry Act, 2002, the licensing exam for mortgage agents in 2010 and graduated from the Automotive Training Centre as a business manager in 2010.
The evidence is also clear that the Appellant was not financially responsible in the conduct of business. The Appellant was convicted for failing to collect and remit GST and PST as required. In 2011, the Appellant made an assignment in bankruptcy at which time he had debts totalling $586,326.28 and assets of $8,001. The Appellant's Statement of Affairs in the bankruptcy shows $406,929.78 and $107,597.65 owing to the Ministry of Revenue for corporate taxes as well as $5,647.48 to the Workplace Safety & Insurance Board, in addition to other creditors. By not remitting GST and PST, the Appellant has taken funds from third parties and treated them not as trust funds but as his own. The handling of trust funds is one of the obligations of a real estate professional.
At the hearing, the Appellant submitted a letter from the religious institution where he volunteers in which the author of the letter described the Appellant as "...incredibly hard working and honest and can be relied and depended upon to complete any task he is assigned...." The Appellant also submitted a document dated January 26, 2017 addressed to "Registrar" in which ReMax states that it is prepared to employ the Appellant "...conditionally and on probation..." on certain terms. One of the terms is that ReMax "...reserves the right to terminate the agreement at any time without notice or penalty." Neither the author of the letter from the religious institution nor a representative from the brokerage testified at the hearing. Therefore, the Tribunal was left without any sworn testimony about these documents or the circumstances under which they were obtained and can ascribe little weight to these documents. These documents do not outweigh the evidence as to the Appellant's financial position and lack of financial responsibility in the conduct of his business.
For these reasons, the Tribunal finds, on a balance of probabilities, that the Registrar has proven on a balance of probabilities that, having regard to the Appellant's financial position, the Appellant cannot reasonably be expected to be financially responsible in the conduct of business and falls within section 10 (1) (a) (i) of the Act.
Based on the evidence before the Tribunal, it is also clear that the past conduct of the Appellant affords reasonable grounds for belief that the Appellant will not carry on business in accordance with law and with integrity and honesty.
The Appellant was previously registered with OMVIC as a motor vehicle salesperson. On December 29, 2010, the Appellant's registration was revoked. This was part of a Notice of Proposal to revoke the registration of the Appellant's son as a salesperson and refuse the registration of Imperial Fine Cars Inc. as a motor vehicle dealer. The reason for this proposal was the Appellant's convictions for Retail Sales Tax evasion and his failure to disclose those convictions to OMVIC.
This Tribunal considered the conduct of the Appellant at the hearing to consider the Notice of Proposal of May 24, 2012 to revoke the motor vehicle dealer licence of Imperial Fine Cars Inc. and the salesperson licence of the Appellant's son. In its decision dated February 26, 2013, and released as 7455 v Registrar, Motor Vehicle Dealers Act, 2002, 2013 CanLII 11904 (ON LAT), the Tribunal noted that pursuant to a Consent Order made July 15, 2011, the Appellant was not to be involved in the operation of the dealership Imperial Fine Cars Inc. "...directly or indirectly and will not be employed by the Dealership in any capacity...". Contrary to the Order, the Tribunal found that on October 5, 2011 the Appellant was the bookkeeper for Imperial Fine Cars Inc. Further, at the Tribunal hearing, evidence was led that the Appellant had identified himself to the Registrar's inspector as "Asim Hussein...and advised that he was not a salesperson..." but was "...the accountant for the business". This is evidence of the Appellant misrepresenting his identity and continuing to be involved in the business contrary to the Consent Order. This evidence demonstrates a disregard for the law, the regulators and a lack of integrity and honesty. Taken together with the criminal convictions for breach of taxing statutes and his disregard for remittances to government authorities as disclosed by the Statement of Affairs in the bankruptcy, there is ample evidence that the past conduct of the Appellant affords reasonable grounds for belief that the Appellant will not carry on business in accordance with the law and with integrity and honesty.
While the Tribunal recognizes that the Appellant seeks registration in order to be able to make a living and support his family, the Act is designed to protect the public interest. Real estate professionals are required to carry on business in accordance with the law and with integrity and honesty. The Appellant still owes money on the fines resulting from his criminal convictions and is under financial pressure as a result of these financial obligations and his lack of employment. Based on the past conduct, the Tribunal has concerns about whether the Appellant will comply with the Act. For these reasons, the Tribunal finds that the Registrar has proven on a balance of probabilities that the past conduct of the Appellant affords reasonable grounds for belief that the Appellant will not carry on business in accordance with the law and with integrity and honesty under section 10 (1) (a) (ii) of the Act.
The Tribunal has considered the submissions of the Appellant's Counsel that, notwithstanding the Appellant's past conduct, the imposition of conditions can adequately address any concerns and ensure that the Appellant acts with integrity and honesty and in accordance with the law. The conditions suggested are that the Appellant be employed by ReMax pursuant to the terms of the document put forward at the hearing. The document allows ReMax to terminate its agreement with the Appellant "...at any time without notice nor penalty". The Tribunal accepts that in his testimony, the Appellant has expressed remorse and has demonstrated that he has paid some, but not all, of the financial penalties imposed as a result of the criminal convictions. However, in totality, the weight of the evidence has demonstrated that the Appellant's conduct, if repeated, may thwart efforts to supervise him to the extent necessary to ensure compliance with the law and with the requirements of integrity and honesty. The Tribunal is not convinced that the Appellant can be monitored closely enough, especially given that work as real estate salesperson is by its nature independent, that such misconduct could be prevented. The Tribunal concludes therefore that this is not a situation where registration subject to conditions is appropriate.
ORDER
Pursuant to the authority vested in it under the provisions of the Act and specifically pursuant to section 14 (5) of the Act, the Tribunal directs the Registrar to carry out the Proposal to Refuse Registration dated April 4, 2016.
LICENCE APPEAL TRIBUNAL
_______________________ Patricia McQuaid, Vice-Chair
________________________
Avril A. Farlam, Vice-Chair
Released: March 14, 2017