Licence Appeal Tribunal

Safety, Licensing Appeals and Standards Tribunals Ontario

Date: 2017-06-30

An appeal from a Notice of Proposal by the Registrar, Real Estate and Business Brokers Act, 2002, to Refuse Registration.

Between:

Hadi Mahmoodi Appellant

and

Registrar, Real Estate and Business Brokers Act, 2002 Respondent

Reasons for Decision

Panel: Harinder S. Gahir, Vice-Chair

Appearances:

For the Appellant: David Burke, Counsel

For the Respondent: Jonathan Miller, Counsel

Place and date(s) of hearing:

City of Toronto, Ontario August 26, 2015, April 18, 19, May 4, 2017

Reasons for Decision

Overview:

The appellant, Mr. Hadi Mahmoodi, appeals from a proposal to refuse his application for registration as a salesperson under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C ("REBBA" or the "Act"). That proposal was issued by the Registrar under the Act (the "Registrar" or "respondent").

In 2008, Mr. Mahmoodi and his corporation, Canadian Best Auto Inc., were registered as a salesperson and a motor vehicle dealer respectively under the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B ("the MVDA"). In May 2012, the Registrar under the MVDA proposed to revoke both registrations and, after holding a hearing, this Tribunal directed the Registrar to carry out its proposal based on findings that Mr. Mahmoodi had engaged in dishonest sales practices.

In 2014, Mr. Mahmoodi applied for registration as a real estate salesperson under REBBA. He also applied to be re-registered as a salesperson under the MVDA. The Registrars under both Acts issued proposals to refuse his registration, and Mr. Mahmoodi appealed both proposals to the Tribunal. In November 2015, a different panel of the Tribunal directed the Registrar to carry out its proposal to refuse to register Mr. Mahmoodi under the MVDA.

This appeal relates solely to Mr. Mahmoodi's application for registration under REBBA. For the reasons that follow, the Tribunal directs the Registrar to carry out its proposal to refuse Mr. Mahmoodi's registration as a real estate salesperson.

Issues

The issue in this appeal is whether the Tribunal should direct the Registrar to refuse Mr. Mahmoodi's registration as a salesperson under the Act because of any or all of the following issues:

i. having regard to Mr. Mahmoodi's financial position, particularly his failure to pay his liability to the Motor Vehicle Dealers Compensation Fund, Mr. Mahmoodi cannot reasonably be expected to be financially responsible when conducting business;

ii. the past conduct of Mr. Mahmoodi as a salesperson under the MVDA affords reasonable grounds for the belief that Mr. Mahmoodi will not carry on business in accordance with law and with integrity and honesty; or

iii. Mr. Mahmoodi provided false statements in his application for registration.

Procedural History

The hearing in this matter started on August 26, 2015 (the "REBBA Hearing"). The Registrar presented its evidence. The Tribunal adjourned the hearing to October 22, 2015 at the request of Mr. Mahmoodi's counsel because a key witness failed to attend the hearing.

In the intervening period, it came to the Registrar's attention that Mr. Mahmoodi had applied for registration under the MVDA. Due to his MVDA application, the Registrar's counsel believed there were now additional grounds to refuse Mr. Mahmoodi's registration. The Registrar believed Mr. Mahmoodi provided false information on his REBBA application regarding his MVDA application. On October 9, 2015, the respondent issued a Supplemental Notice of Proposal detailing the new allegations.

At the request of both parties, the Tribunal further adjourned the REBBA hearing to December 2, 2015. During this time, the Tribunal heard Mr. Mahmoodi's MVDA appeal and had directed the Registrar under the MVDA to refuse his registration as a motor vehicle salesperson. Considering the MVDA decision, the Registrar's counsel brought a motion seeking to quash Mr. Mahmoodi's REBBA appeal on the basis that the issues in this appeal had already been determined in the MVDA decision. The Tribunal denied the Registrar's motion in separate reasons.

The Registrar issued a second Supplemental Notice of Proposal to Refuse Registration on February 24, 2017 that outlined further particulars of the allegations against Mr. Mahmoodi.

The hearing of this appeal continued on April 18, 19 and May 4, 2017.

Facts and Evidence

The findings of the Tribunal in its 2012 and 2015 decisions with respect to the appellant's MVDA registration are accepted as fact for the purpose of this proceeding, as it would be inappropriate to relitigate those findings. In addition to those facts, the Tribunal has considered the evidence presented by both parties.

Previous Tribunal proceedings

2012 Proceeding – Proposal to Revoke Registration under the [MVDA](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-b/latest/so-2002-c-30-sch-b.html)

Mr. Mahmoodi's problems started when his customers complained to the Ontario Motor Vehicle Industry Council ("OMVIC") regarding his questionable business conduct. OMVIC is the agency that administers the MVDA. The number of complaints against Mr. Mahmoodi was much higher than the industry average. In 2011, the Registrar under the MVDA issued a proposal to revoke the registrations of Mr. Mahmoodi and his corporation. Mr. Mahmoodi appealed that proposal to the Tribunal. On May 29, 2012, the Tribunal directed the Registrar to revoke Mr. Mahmoodi's registration as a salesperson and his corporation as a dealer.

The Tribunal found that there were multiple instances of dishonesty by Mr. Mahmoodi towards consumers. The Tribunal found that Mr. Mahmoodi had questionable sales techniques. Specifically, he would establish a rapport with a buyer and make any promises he felt were necessary, even false promises, to secure the sale. He did not feel comfortable until he convinced the consumer to provide a deposit. Once he had the money, he would often fail to return it to customers even if the deal fell through.

The Tribunal also found that Mr. Mahmoodi sold vehicles without full disclosure of known material defects to his customers. Additionally, he continued to advertise his business even after the Tribunal suspended his registration pending his 2012 appeal. His deception continued when he misled the Tribunal by providing a falsified Car Proof Report regarding a motor vehicle sale.

The Tribunal also found that Mr. Mahmoodi forged the signature of a customer on a bill of sale and claimed that the customer had lied about not having signed the bill of sale.

In some instances, Mr. Mahmoodi failed to fully disclose the damage and financing terms to some of his customers.

2015 Proceeding – Proposal to [Refuse](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-c/latest/so-2002-c-30-sch-c.html) Registration under the [MVDA](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-b/latest/so-2002-c-30-sch-b.html)

The appellant reapplied for registration as a salesperson under the MVDA in October 2014. The Registrar under the MVDA proposed to refuse his application and he appealed that proposal to the Tribunal. In November 2015, the Tribunal directed the Registrar under the MVDA to carry out its proposal to refuse Mr. Mahmoodi's registration, as the Tribunal found that there were reasonable grounds for the belief that Mr. Mahmoodi would not conduct his business in accordance with law and with integrity and honesty.

The Tribunal reviewed Mr. Mahmoodi's conduct after the revocation of his registration in 2012 and found that the lessons Mr. Mahmoodi learned from the 2012 Tribunal decision appeared to be marginal. The Tribunal also found that there was insufficient evidence to show that Mr. Mahmoodi fully understood his statutory obligations in a regulated industry. The Tribunal held that Mr. Mahmoodi must demonstrate this change. Merely asserting that he now knows better does not suffice.

Evidence in the current proceeding

The Registrar called two witnesses and Mr. Mahmoodi called three witnesses, in addition to himself. Both parties submitted documents that the Tribunal entered as exhibits.

Angela Volpe

The Registrar's first witness, Ms. Volpe, has been employed with the Real Estate Council of Ontario ("RECO") as a manager of registrations since 2008. She handled Mr. Mahmoodi's application for registration under the Act. When justifying the Registrar's refusal to register Mr. Mahmoodi, Ms. Volpe testified that the Registrar has concerns that based on Mr. Mahmoodi's past and present conduct, he is not likely to conduct his business in accordance with law and honesty and integrity. Ms. Volpe stated that the Registrar believes that Mr. Mahmoodi had not learned from his past mistakes. Specifically, he was not truthful when he applied for registration under REBBA and when he applied for the MVDA registration in October 2014.

Ms. Volpe explained that while Mr. Mahmoodi's REBBA application was pending, in October 2014 he applied for registration as a motor vehicle salesperson under the MVDA. In his MVDA application, Mr. Mahmoodi answered "no" to the question, "Will the applicant be involved in commercial, professional or business activities other than those related to this application". This was false information as Mr. Mahmoodi had submitted his application for registration as a salesperson under REBBA in June 2014.

Furthermore, Mr. Mahmoodi wrote a letter to the Registrar on February 11, 2015. The letter shows that Mr. Mahmoodi downplayed his questionable conduct while he was a dealer and salesperson of used cars. Ms. Volpe testified that the following paragraph is particularly troubling:

During almost 3 years selling used vehicles (from 2008-11), I completed over 250 transactions. As with all major purchases, customers often experience 'buyer's remorse' for any number of reasons – despite clear contract terms and having had the option to seek independent opinions prior to closing the deal. In 17 of these 250+ occurrences, a complaint was filed thereafter against my dealership – typically either because they changed their mind between deposit and pickup or for a perceived mechanical defect that arose after the warranty period expired. I tried to resolve these directly by providing complete documentation of costs incurred in vehicle preparation or an offer to share repair charges even if I was not legally obliged to do so – but without success. In one instance, a discrepancy over accident history reports came up differently in web searches. The OMVIC complaint handler subsequently found that there was no misrepresentation, fraudulent activity or blatant bad conduct on my part in any one of these – dismissing all charges and issuing no reprimands…I voluntarily left this business one year prior to the OMVIC revocation. I will not re-apply, even though I am again eligible now that 2 years have passed from that date.

Ms. Volpe testified that Mr. Mahmoodi's conduct calls into question his credibility, which is essential to be a realtor. Realtors are obligated to disclose all defects in the property to their clients so that clients can make informed decisions based on all material facts. Mr. Mahmoodi's failure of his obligation to the Registrar raises significant doubt that he will be able to fulfil his obligations towards his clients in the real estate industry (if he were to be registered under the Act). The Registrar also had concerns about Mr. Mahmoodi continually failing to take responsibility for his actions and his attempts to blame his customers for experiencing "buyer's remorse".

The Registrar also has concerns that Mr. Mahmoodi cannot reasonably be expected to be financially responsible for the conduct of his business. She testified that after the 2012 Tribunal hearing, the Motor Vehicle Dealers Compensation Fund (the "Fund") awarded an amount of $3,500.00 to two customers of Mr. Mahmoodi. He is obligated to repay the Fund. This is an obligation that Mr. Mahmoodi acknowledged during his 2015 OMVIC hearing. However, as of the date of this hearing the full amount is still outstanding, even though OMVIC has contacted Mr. Mahmoodi several times.

Tim Hines

Mr. Hines is employed with OMVIC as a manager of complaints. He dealt with Mr. Mahmoodi while he was registered under the MVDA. Mr. Hines testified that Mr. Mahmoodi did not accept his past mistakes and tried to justify his actions when he applied for his re-registration as a salesperson in 2014.

Mr. Hines testifed that about 30 per cent of Mr. Mahmoodi's customers filed complaints to OMVIC. The number of complaints filed against Mr. Mahmoodi significantly exceeds the industry average. Furthermore, Mr. Hines stated that Mr. Mahmoodi was never cooperative with OMVIC investigators. In Mr. Hines' opinion, Mr. Mahmoodi is totally ungovernable, he is deceptive and does not accept his past mistakes.

Appellant Hadi Mahmoodi

Mr. Mahmoodi testified that upon having his registrations revoked under the MVDA in 2012 he travelled overseas to see his parents. During this time, he worked for a mining company in Spain for about six months. He testified that during most of the time his registration was revoked, he was unemployed and his parents were and are continuing to financially support him. Mr. Mahmoodi emphasizes that he lost a lot of money in the used car dealership business and that his financial situation has suffered as a result.

Mr. Mahmoodi returned to Canada in 2013 and enrolled in OREA Real Estate College and completed his program in five or six months. Mr. Mahmoodi's parents paid for his tuition and living expenses.

Mr. Mahmoodi testified that he attended mentorship classes and connected with a senior broker at Home Life Bay View Realty. Mr. Mahmoodi states that the mentorship classes taught him how to build a strong foundation in the real estate business by focusing on building trustworthy client relationships. Mr. Mahmoodi stated that if he were to receive his registration he would be offered employment with Home Life Bay View Realty.

Mr. Mahmoodi stated that he has learned from his past mistakes and is willing to work under the supervision of a senior broker because he valued mentorship after his experience in the car industry. Mr. Mahmoodi repeated that he was ashamed of his past mistakes, that he did terrible things, and that he blames himself for not being educated.

The Registrar's counsel asked Mr. Mahmoodi a question regarding him forging signatures of his customers and showed him the relevant part of the 2012 Tribunal decision. Mr. Mahmoodi refused to acknowledge that he forged signatures on documents; rather, he testified that "I did not forge the signatures. Past is past, everybody makes mistakes. I should get a second chance".

The Registrar's counsel drew Mr. Mahmoodi's attention to the Tribunal's 2012 decision wherein the Tribunal found that Mr. Mahmoodi submitted a falsified Car Proof Report. Mr. Mahmoodi insisted that he did not present a fraudulent Car Proof Report to the Tribunal. He stated that although he respects the decision of the Tribunal he does not agree with it. However, he did not appeal the Tribunal's findings.

Upon being questioned about providing false information to OMVIC in Mr. Mahmoodi's 2014 application, in which he stated that he would not be involved in any other business or profession, he agreed that it was a mistake. Mr. Mahmoodi testified that his 2014 application for registration under the MVDA was intended as a backup plan in case he did not get his registration under REBBA.

Steven Schmeiser

Mr. Mahmoodi's counsel called three witnesses. Mr. Mahmoodi's first witness, Mr. Schmeiser, has been a broker of record for 18 years for Home Life Bay View Realty Inc. Mr. Schmeiser walked the Tribunal through the career development program offered by his brokerage stating that it was the "a to z in industry, with over 50 lessons". He stated that he will supervise Mr. Mahmoodi if he is registered as a salesperson.

Under cross-examination it was discovered that Mr. Schmeiser was not fully aware of Mr. Mahmoodi's past conduct. This conduct included Mr. Mahmoodi's unsettled debt to the Fund and making false statements to the Registrar. Mr. Schmeiser testified that Mr. Mahmoodi attended mentoring sessions that he hosted. However, he did not know how many of those classes Mr. Mahmoodi attended. Furthermore, Mr. Schmeiser did not accept the Tribunal's 2012 findings with respect to Mr. Mahmoodi forging customer's signatures and providing doctored documents.

S.F.

Mr. Mahmoodi's fiancée also testified. She has known Mr. Mahmoodi for five years and stated that she knew Mr. Mahmoodi was having difficulties. However, she believes that Mr. Mahmoodi has changed and has become very responsible.

S.S. T.

Mr. Mahmoodi's final witness has known Mr. Mahmoodi for five years and provides English classes. She did not recall how many sessions Mr. Mahmoodi took but believes that he would not mislead people. Under cross-examination, Mrs. T. stated that she did not know Mr. Mahmoodi was registered with OMVIC or applied to be a realtor. She also did not know about his employment history.

Law

Section 4 of the Act prohibits anyone from trading in real estate unless they are registered under the Act. An applicant who meets the prescribed requirements is entitled to registration unless one of the grounds set out in s. 10(1) of the Act is met. For an applicant who is not a corporation, those grounds include s. 10(1)(a):

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;

According to s. 13 of the Act, the registrar may refuse, suspend, revoke or refuse to renew a registration if, in the registrar's opinion, the applicant is not entitled to registration under s. 10.

Section 14 of the Act states that following a hearing, the Tribunal 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

The Registrar's counsel submitted that the Tribunal should do what it did in 2012 and 2015: dismiss Mr. Mahmoodi's appeal to protect consumers in the province. Mr. Mahmoodi's counsel submitted that Mr. Mahmoodi's circumstances have changed as he has learned from his past mistakes and urged the Tribunal to allow Mr. Mahmoodi to be registered as a salesperson under the Act.

Financial Responsibility

Issue 1: Given Mr. Mahmoodi's financial position, particularly his failure to pay his liability to the Fund, can he reasonably be expected to be financially responsible in the conduct of his business?

The Registrar submits that in 2012, the Registrar under the MVDA allowed two Compensation Fund Claims out of the Fund to be paid to Mr. Mahmoodi's customers to whom he had sold two vehicles. The total amount of Mr. Mahmoodi's liability is $3,507.00. Mr. Mahmoodi knows that he is obligated to reimburse the Fund for the payments that the Fund made to his customers. However, he has neglected to make any payments to the Fund.

Under cross-examination, Mr. Mahmoodi acknowledged his liability to the Fund. He expressed his inability to pay his liability to the Fund as he is unemployed. However, he also acknowledged having access to a total of $50,000.00 credit from a line of credit and Visa.

The Tribunal does not accept Mr. Mahmoodi's reason for evading his liability when he clearly has access to credit and support from his parents. Mr. Mahmoodi's counsel submitted that RECO did not provide evidence that if he starts working he will not make payments. It is Mr. Mahmoodi's responsibility to pay the amounts owing to the Fund, and he has not paid it in the last five years. It is concerning that although Mr. Mahmoodi can be gainfully employed, he has not been able to secure employment since January 2014 and has neglected to honor his obligations under the MVDA. His failure to pay the amount owing to the funds despite having access to sufficient credit to do so shows a lack of responsibility toward his financial obligations.

Accordingly, the Tribunal finds that based on Mr. Mahmoodi's financial position, and his failure to pay the amount owing to the fund, he cannot reasonably be expected to be financially responsible in the conduct of his business.

False Statements on the Application

Issue 2: Should the Tribunal refuse Mr. Mahmoodi's appeal because he provided false statements in his application for registration?

The basic standards imposed on those in the real estate profession are set out in section 10 of the Act. For the Registrar to determine whether an applicant meets these standards, the applicants need to provide detailed information on the application for registration or renewal of registration. The Registrar considers this disclosure as well as any other information on the applicant's past conduct before deciding whether to approve an application. The Tribunal is of the view that the disclosure obligation is the first test of integrity. This is a test that Mr. Mahmoodi failed.

The Divisional Court in Registrar, Motor Vehicle Dealers Act v Vernon, 2016 ONSC 304 held that the task of the Tribunal, in applying s. 6(1) (a)(iii) of the MVDA was to determine whether the respondent made a false statement to the Registrar and whether he knowingly did so. In that case, the Court relied on Racco v. Ontario (Registrar, Real Estate and Business Brokers Act, 2002), 2015 ONSC 6233 (Div. Ct.) at para. 28.

Section 10(1)(iii) of the Real Estate and Business Brokers Act, 2002 disentitles an applicant who makes a false statement or provides a false statement in an application for registration or for renewal of registration. In the case at hand, there are a few instances where Mr. Mahmoodi provided false statements to the regulator. Mr. Mahmoodi wrote a letter to the Registrar on February 11, 2015. The letter shows that the applicant tried to mislead the Registrar by downplaying his role while he was a dealer and salesperson of used cars. He mentioned in his letter that he left the car dealership business one year prior to the OMVIC revocation, which was not true. I find that these false statements were knowingly made in an attempt to minimize his past misconduct in his application. Accordingly, I find that the appellant provided false statements within the meaning of s. 10(1)(a)(ii) of REBBA.

Past Conduct

Issue 3: Should the Tribunal refuse Mr. Mahmoodi's registration because his past conduct affords reasonable grounds for the belief that he will not carry out his business in accordance with law, with integrity, and with honesty?

In May 2012, the Tribunal found that Mr. Mahmoodi's egregious and unlawful conduct resulted in consumer harm. The condensed list of his misconduct included Mr. Mahmoodi providing a fake warranty to a consumer and taking a credit card deposit from a customer without a contract. When the customer decided he did not want to proceed with the transaction, Mr. Mahmoodi refused to refund the deposit. He also forged the signatures of a customer on a bill of sale and submitted a falsified Car Proof Report to the Tribunal during his 2012 hearing.

During his 2012 OMVIC hearing, Mr. Mahmoodi requested an extended adjournment from the Tribunal. The Tribunal agreed to Mr. Mahmoodi's request and suspended his registrations pending the conclusion of the hearing. When the hearing resumed, the Tribunal found that Mr. Mahmoodi had placed advertisements to sell cars while his registrations were suspended.

Between the 2012 Tribunal decision and the current matter, Mr. Mahmoodi had five years to change his conduct but he failed to do so. Mr. Mahmoodi applied to OMVIC for registration as a salesperson in October 2015. He again made false statements in his application and mischaracterized his 2012 revocation. A different panel of the Tribunal in 2015, dealing with his MVDA appeal, found that Mr. Mahmoodi downplayed the severity of his past conduct.

When addressing the Registrar's concerns regarding Mr. Mahmoodi's past conduct under the MVDA, his counsel submitted that Mr. Mahmoodi did not have the supervision that he clearly needed because he was his own boss. He did not understand his obligations at the time of OMVIC registration. He has now prepared himself through in-depth education and sought out help from mentors. He insisted that it would not be correct to say that nothing has changed.

Mr. Mahmoodi's counsel conceded that the nature of the real estate industry is that no one can fully supervise a salesperson but his broker can meet Mr. Mahmoodi's clients and every deal will go through him. Mr. Mahmoodi's counsel also conceded that he bolstered his credentials on his resume by including a degree that he did not complete. He recognized it as a significant issue.

The Tribunal has considered all of the evidence of Mr. Mahmoodi's past conduct. Based on Mr. Mahmoodi's past conduct, which includes falsifying documents, taking deposits from customers without a contract and then refusing to return them, failing to disclose material defects to consumers, conducting business under a suspended registration, and downplaying his past conduct in subsequent applications for registration, the Tribunal finds that there are reasonable grounds to believe that Mr. Mahmoodi will not carry out his business under the Act in accordance with law, with integrity, and with honesty

The Tribunal is of the view that the lack of proper education, training, and fluency in the language does not excuse one's dishonest conduct. The Tribunal has considered the steps that Mr. Mahmoodi has taken to pursue training and education in real estate. Although this training has been relatively in-depth, it is insufficient to outweigh Mr. Mahmoodi's prior acts of dishonesty and lack of integrity.

It is also concerning that Mr. Mahmoodi does not appear to have learned from his mistakes. His testimony that he "did not forge the signatures…past is past, everybody makes mistakes" and the correspondence of February 11, 2015 in which he blamed his misconduct on consumers demonstrate how Mr. Mahmoodi attempts to minimize his past misconduct. Although Mr. Mahmoodi would be supervised if he were registered under REBBA, there is reason to believe that his future dealings as a realtor would likely mirror his past conduct.

Conclusion

The real estate industry involves major transactions and large sums of money, often the life savings of consumers. Therefore, a high degree of trustworthiness is required in order to be registered.

The Tribunal finds that the persistent nature of Mr. Mahmoodi's mischaracterization of his past raises real concerns that no oversight would be effective in protecting the public. Mr. Mahmoodi's counsel submitted that the Tribunal should allow his appeal and impose conditions. He did not submit any conditions for Tribunal's consideration. The Tribunal is of the view that it is not possible to create terms and conditions to substitute for honesty.

The Tribunal concludes that Mr. Mahmoodi's false statements on his REBBA and OMVIC applications, providing misleading information to the Registrar, dishonest practices as a motor vehicle dealer, persistent mischaracterization of his past conduct, and his failure to pay his debts to the Fund raise serious concerns about his ability to conduct his business in accordance with the requirements of the Act.

Therefore, the Tribunal finds that the appellant is not entitled to registration under section 10 of the Act.

Order

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs the Registrar to carry out its Proposal to refuse Mr. Mahmoodi's registration as a salesperson under the Act.

LICENCE APPEAL TRIBUNAL

_________________________

Harinder S. Gahir, Vice-Chair

Released: June 30, 2017