Date: 2018-04-27

Appeal from a Proposal of the Registrar under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C to Revoke Registration

Between:

Paolo (Paul) Fasciani Appellant

And

Registrar, Real Estate and Business Brokers Act, 2002 Respondent

DECISION AND ORDER

Adjudicator: Avril A. Farlam, Vice-Chair

Appearances:

For the Appellant: Jerry Herszkopf, Counsel

For the Respondent: Ian Daley, Counsel

Heard in Toronto: November 21, November 29, 2017 and April 3, 2018

REASONS FOR DECISION AND ORDER:

A. Overview

1Under the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C (“Act”) the Deputy Registrar (“RECO”) issued a Notice of Proposal to Revoke Registration dated February 10, 2017 (“NOP”) to revoke Paolo Fasciani’s registration as a salesperson under the Act on the basis that his past conduct affords reasonable grounds for the belief that he will not carry on business in accordance with the law and with integrity and honesty, specifically that Mr. Fasciani falsely responded to a number of questions on past applications and failed to inform the respondent of past refusals to register by the registrar under the Ontario Motor Vehicle Dealers Act (“OMVIC”). Mr. Fasciani appealed to this Tribunal.

B. ISSUES TO BE DECIDED:

2The issues to be decided are as follows:

a. Does Mr. Fasciani’s past conduct afford reasonable grounds for the belief that he will not carry on business in accordance with the law and with integrity and honesty, specifically that Mr. Fasciani falsely responded to a number of questions on past applications and failed to inform the respondent of past OMVIC refusals to register?

b. If so, is revocation of Mr. Fasciani’s licence appropriate?

C: CONCLUSION:

3The respondent has not established that Mr. Fasciani’s past conduct affords reasonable grounds for the belief that he will not carry on business in accordance with the law and with integrity and honesty specifically, that Mr. Fasciani falsely responded to a number of questions on past applications and failed to inform the respondent of past OMVIC refusals to register. I order the Registrar not to carry out the NOP. However, Mr. Fasciani’s licence as a salesperson shall be subject to the condition that Mr. Fasciani shall have his lawyer review his renewal application for the next two renewals and confirm such review to RECO at the time each application is submitted.

D. LAW:

4Section 4 of the Act prohibits a person from trading in real estate unless they are registered under the Act.

5Section 10(1)(a) of the Act provides that 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;

6Section 10 (1) of the Act establishes that there is a presumptive right to registration if the applicant has met the prescribed requirements. The presumption may be rebutted if the Registrar can prove, on a balance of probabilities, that the applicant 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 applicant’s past conduct as a whole.

7Section 13 of the Act sets out that 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.

8The registrant may appeal the proposed revocation to the Tribunal. At the Tribunal hearing, the onus is on the respondent to prove one or more of the grounds under section 10(1) of the Act.

9Pursuant to section 14 of the Act, 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.

10Section 34(1) of Ontario Regulation 567/05 under the Act states that if there is a change to any of the information that was included in the registrant’s application under section 3, the registrant shall notify the Registrar, in writing, within five days after the change takes place and shall set out the nature of the change. Section 40 (1)(c) of the Act states that a person is guilty of an offence who contravenes or fails to comply with any section of the Act or regulations made under the Act, other than a code of ethics established by the Minister under section 50.

E: EVIDENCE AND ANALYSIS:

a. Does Mr. Fasciani’s past conduct afford reasonable grounds for the belief that he will not carry on business in accordance with the law and with integrity and honesty, specifically that Mr. Fasciani falsely responded to a number of questions on past applications and failed to inform the respondent of past OMVIC refusals to register?

11Mr. Fasciani was registered as a motor vehicle salesperson from 1999 to 2008 and two companies of which he was the sole officer and director, Profile Fine Cars Inc. and Profile Auto Group Ltd., were registered as dealers in 1999 and 2007 respectively. Mr. Fasciani’s dealerships had financial difficulties and failed in 2008.

12Mr. Fasciani has been registered and employed as a real estate salesperson with Weiss Realty Ltd. since 2009. The two registrations are administered by two different registrars under two different pieces of legislation - Ontario Motor Vehicle Dealers Act (“OMVIC”) and Real Estate and Business Brokers Act, 2002 (“RECO”).

Facts Not in Dispute

13In 2008 OMVIC issued a Notice of Proposal to revoke the registrations of Mr. Fasciani and his dealership companies (“2008 OMVIC NOP”). No appeal was filed by Mr. Fasciani and so OMVIC revoked the registrations of Mr. Fasciani and his companies. Years later Canada Post confirmed that Mr. Fasciani never received the 2008 OMVIC NOP.

14On September 18, 2009, Mr. Fasciani applied to RECO to be registered as a real estate salesperson and was approved.

15On December 7, 2009, Mr. Fasciani became bankrupt because of the failed motor vehicle dealerships. At the time of the bankruptcy, he was an officer and director of 5 companies. He was discharged from bankruptcy on September 8, 2010.

16On October 22, 2010 Mr. Fasciani applied to OMVIC for registration.

17In December, 2010 RECO did a search and found that on November 4, 2010 Quick Credit and another creditor (collectively “Quick Credit”) filed an execution against Mr. Fasciani. Mr. Fasciani’s trustee in bankruptcy wrote to Quick Credit demanding the execution be removed but it was not. Mr. Fasciani sued to set aside the Quick Credit default judgment and execution.

18On January 26, 2011 OMVIC issued a Notice of Proposal to refuse registration of Mr. Fasciani as a motor vehicle salesperson (“2011 OMVIC NOP”) based, in part, on the grounds set out in the 2008 OMVIC NOP, false disclosures in his 2009 RECO application, falsifying documents in relation to motor vehicle transactions, false documents submitted to the Ministry of Transportation and false documents submitted to two lenders, including Quick Credit.

19Mr. Fasciani appealed the 2011 OMVIC NOP and brought a motion to extend the time to appeal the 2008 OMVIC NOP. Canada Post confirmed that Mr. Fasciani never received the 2008 OMVIC NOP. Mr. Fasciani withdrew his motion to extend the time to appeal the 2008 OMVIC NOP on the basis that the withdrawal was without prejudice to him in his appeal of the 2011 OMVIC NOP and that he shall not be deemed to admit any fact in the 2008 OMVIC NOP or that he ever received it. The Tribunal’s Order of April 19, 2012 states “Given the concurrent lawsuit presently before the Superior Court involving the applicant and the same and/or related allegations of fact, the applicant has opted to prepare a…Notice of Withdrawal…whereby he will withdraw his February 4, 2011 appeal…. The Registrar acknowledges that in withdrawing his appeal prior to the hearing, the applicant has not admitted the truth of the particulars and allegations of fact contained therein.” Following the withdrawal, OMVIC refused Mr. Fasciani’s registration on April 25, 2012.

20On August 24, 2011 RECO issued a Notice of Proposal (“RECO NOP”) to revoke Mr. Fasciani’s registration as a real estate salesperson on the basis that Mr. Fasciani’s past conduct provided reasonable grounds to believe that he would not carry on business in accordance with the law and with integrity and honesty under s. 10(a)(iii) of the Act, alleging he had falsely responded to a question regarding a past bankruptcy, falsely responded to a question regarding any other registrations and/or licenses having been refused, suspended or revoked and failed to inform the registrar about an unpaid personal judgment. Mr. Fasciani appealed to this Tribunal.

21Ian Daley, counsel, represented RECO at the pre-hearing held November 4, 2011. The Tribunal ordered that the RECO NOP not be implemented, the proceedings be concluded, the file be closed and that Mr. Fasciani advise RECO of the outcome of his appeal in Tribunal file 6484/MVDA and the Quick Credit action.

22On September 16, 2011 the Court set aside the Quick Credit default judgment and execution filed in November, 2010.

23On September 13, 2013, Mr. Fasciani applied to renew his registration as a real estate salesperson with RECO.

24By letter dated January 22, 2014 to Mr. Fasciani, RECO acknowledged it knew the Quick Credit action was set aside by the Court on September 16, 2011, that Mr. Fasciani had advised that Quick Credit subsequently filed a claim against him, there was a counterclaim and proceedings were ongoing.

25RECO advised Mr. Fasciani it would renew his registration if he and his broker would sign Conditions requiring him to update RECO in writing on the progress of the Quick Credit action and notify RECO in writing within 5 days of any judgments or complaints filed against him, and if there is a change to any of the information that was included in his application. Conditions were signed on April 16, 2014 and Mr. Fasciani’s application for renewal was approved by RECO.

26On May 15, 2014, Mr. Fasciani applied to OMVIC for registration. OMVIC issued a Notice of Proposal to refuse registration as a salesperson on July 22, 2014 (“2014 OMVIC NOP”). Mr. Fasciani appealed but withdrew his appeal prior to the hearing at the Tribunal. Following the withdrawal, his registration was refused by OMVIC on March 3, 2015.

27On September 2, 2015, Mr. Fasciani applied to renew his registration as a real estate salesperson with RECO.

28On April 8, 2016 the Court dismissed the Quick Credit’s action against Mr. Fasciani.

Did Mr. Fasciani make false responses on past applications?

29Angela Volpe, manager of registration at RECO, testified that the Act is to be administered in the public interest because it is basically consumer protection legislation for the trading of real estate in Ontario. She said that the primary concerns under s. 10 of the Act are an applicant’s integrity and that factors to be considered include criminal charges, judgments, any investigations under another regulatory body and secondary employment which may conflict. Brokers are looked at a little more closely than salespersons.

30Mr. Fasciani on his September 18, 2009 RECO application answered “no” to the question “Are you, or will you be engaged or employed in any other business, occupation or profession?” The respondent says this was a false answer because he was at that time an officer and/or director of 5 companies – Profile Fine Cars Inc., Profile Fine Cars 2006 Inc., Profile Auto Group Ltd., and two numbered Ontario corporations. Ms. Volpe identified the corporate profile reports on the five companies which the respondent obtained in 2011 or later. She admitted that RECO was given this information by Mr. Fasciani on his first renewal application in 2011 and RECO did not have to go looking for it.

31Ms. Volpe also admitted that RECO is aware that Mr. Fasciani no longer operates the motor vehicle dealership. She agreed that the April 13, 2017 letter to RECO from Mr. Fasciani’s bankruptcy trustee confirms that upon bankruptcy the corporations vested in the trustee and Mr. Fasciani no longer retained an interest in those companies. She agreed that Mr. Fasciani did disclose the information about the five companies but not within the required five-day period. Ms. Volpe also admitted that when the respondent wrote for an explanation about Mr. Fasciani’s bankruptcy, the respondent was given his bankruptcy documents, Statement of Claim and correspondence with OMVIC. Ms. Volpe also agreed that Mr. Fasciani had provided a fulsome explanation in his letter to Ms. Yap at RECO dated January 17, 2011 in which Mr. Fasciani said he had assumed all information was sent by the trustee, apologized, and said his intent was not to keep any information from RECO. She said this explanation is not plausible.

32Mr. Fasciani testified that his answer “no” to this question on his September 18, 2009 RECO application is correct because he had no intention at that time of being in any business other than real estate. He understood the question to be whether he would be working in anything other than real estate currently or in the future. At that time he had just completed his Ontario Real Estate Association college courses, was not doing anything with cars and was solely going into real estate. Profile Fine Cars Inc., Profile Auto Group Ltd., 1709472 Ontario Ltd., 1726530 Ontario Ltd. all ceased to do business in 2008. Profile Fine Cars 2006 Inc. had never opened a bank account or operated. As such, I find Mr. Fasciani’s answer was correct and he did not knowingly make a false answer to this question.

33Mr. Fasciani on his September 2011 RECO application answered “yes” to the question “Are you, or will you be engaged or employed in any other business, occupation or profession?” and stated he was “seeking to be employed with Pacific and Vine Garage Ltd as an automotive salesperson.” The respondent says there was a failure to report at this time the same 5 corporations that he failed to disclose in the September 2009 RECO application. Because Mr. Fasciani became bankrupt in December 2009 and the corporations had vested in his trustee, I find Mr. Fasciani’s understanding of the question to be correct, his answer correct and I find that he did not knowingly give a false answer.

34Mr. Fasciani on his September 18, 2009 RECO application answered “no” to the question “Are you now or have you been involved in a personal bankruptcy…” The respondent says this was a false answer because on December 7, 2009 he became personally bankrupt which constituted a change in his September, 2009 application.

35Mr. Fasciani testified that he discussed this with his trustee in bankruptcy who said he was familiar with real estate agents going through bankruptcy. Mr. Fasciani assumed that his trustee would have informed RECO of his bankruptcy. He also testified that because bankruptcy is of public record he thought RECO would have known of it.

36Mr. Fasciani’s testimony is corroborated by his January 17, 2011 letter to RECO which stated “I had assumed all of this information was forwarded to your office from my bankruptcy trustee. I apologize for not making sure it was done. My intent was not to keep any information from RECO. I was told my bankruptcy was public record and assumed RECO had known of it.” In this context I find Mr. Fasciani did not knowingly fail to report his bankruptcy to RECO. I find that Mr. Fasciani assumed his trustee would forward the information about his bankruptcy to RECO and that RECO would also know of it because it was of public record and that these assumptions are reasonable in the specific circumstances of this case.

37Mr. Fasciani on his September 18, 2009 RECO application answered “no” to the question “Are there any unpaid judgments outstanding against you?” The respondent says there was a failure to report a judgment within 5 days because in December 2010 RECO found as a result of a search an execution against Mr. Fasciani from Quick Credit.

38Mr. Fasciani testified that he was unaware of the judgment until 2010. He had become bankrupt in 2009 and understood there could be no judgments arising from Quick Credit or any other dealership creditors. There had been no objections to his bankruptcy, no inspector appointed, no examination by the official receiver and no objections to his discharge. When efforts by his trustee to have the execution removed voluntarily failed, he had to sue to have the judgment set aside and obtained a court Order doing so. His testimony that he was unaware of the judgment is corroborated by his January 17, 2011 letter to RECO in which he states “Thank you for bringing it to my attention that I had a judgment against me. I have informed my trustee as the creditor was included in the bankruptcy. This judgment, according to my understanding, will be invalidated…” It is credible that Mr. Fasciani would believe that Quick Credit should not have been able to file an execution against him given that Quick Credit was one of the creditors included in the bankruptcy and did not object to either his bankruptcy or his discharge. I find Mr. Fasciani was unaware of the judgment until RECO informed him of it and did not knowingly fail to report this to RECO.

Did Mr. Fasciani fail to inform the respondent of past OMVIC refusals to register?

39Thaya Gengatharan, registration manager of OMVIC, admitted that Canada Post never served Mr. Fasciani with the 2008 OMVIC NOP, that no findings have ever been made by the Tribunal against Mr. Fasciani regarding OMVIC NOP’s and that in withdrawing his appeals Mr. Fasciani was deemed not to admit any facts OMVIC alleged against him. She admitted that he keeps applying and OMVIC keeps refusing him a licence as a motor vehicle salesperson on the basis of allegations that have never been proven.

40Ms. Volpe testified that Section 34(1) of Ontario Regulation 567/05 under the Act requires a registrant to advise the Registrar of any change in the application within five days and that this is important because the registrar relies on self-reporting and honesty of the registrants. Ms. Volpe said that she has concerns about the truthfulness of Mr. Fasciani on his numerous applications and is concerned that another regulator has revoked.

41Ms. Volpe testified that RECO conducted a search of the OMVIC records between Mr. Fasciani’s registration in 2009 and his renewal in 2011 but said she did not know why the search was conducted. She maintained that Mr. Fasciani should have told RECO about the 2008 OMVIC NOP even though OMVIC’s counsel and the Tribunal were convinced that he did not get notice of it because Canada Post never delivered it to him. Ms. Volpe said she would be surprised if Mr. Fasciani did not know he was under investigation by OMVIC when he applied to be a real estate salesperson in 2009 and he should have disclosed this. She could not identify any documents to support this statement but said she was relying on her own experience.

42Ms. Volpe agreed that the 2011 RECO NOP was appealed by Mr. Fasciani, went to a pre-hearing, an Order was made by the Tribunal, proceedings were concluded and the file closed. She agreed that in 2013 there was no outstanding NOP. Ms. Volpe stated that she does not believe in 2015 RECO had full disclosure of the matters with OMVIC.

43Ms. Volpe said that the tipping point for the Registrar was that the Conditions Mr. Fasciani signed in April 2016 had not been complied with, namely that he did not update the Registrar’s office in writing on the progress of his ongoing Quick Credit action and did not notify the Registrar’s office in writing within 5 days if there is a change to any of the information included in his application. She considers the OMVIC matters to be part of a pattern of non-disclosure by Mr. Fasciani. However, she admitted that after April 16, 2014, although Mr. Fasciani did not advise the registrar within 5 days, he complied with the disclosure requirements typically by reporting developments on his next renewal application.

44Ms. Volpe testified that many of the registrar’s concerns involve the Quick Credit matter which has been ended by court Order. Ms. Volpe acknowledged that since 2009 when Mr. Fasciani was registered as a salesperson, he has been continually renewed, she is not aware of any complaints by a consumer or other person and he has never been disciplined by RECO.

45Mr. Fasciani, for his part, testified that he did not receive the 2008 OMVIC NOP and thought his licence had expired. This did not concern him as he had no intention at the time of doing anything other than real estate. He found out about the 2008 OMVIC NOP when he applied in 2011 to OMVIC. In 2011 he had counsel and knew Mr. Daley represented RECO before the Tribunal. Because the OMVIC matter was referred to in the November 8, 2011 Tribunal Order, Mr. Fasciani assumed RECO knew of the OMVIC matters. He tried to communicate with RECO by speaking to Mr. Daley and sending him a fax, speaking to Ms. Volpe, writing Ms. Yap a letter dated January 17, 2011, emailing S.R. on October 10, 2013 and having his trustee in bankruptcy send documents. He said he was not trying to mislead RECO or lie on his application but may have been sloppy.

46Although the respondent submits that Mr. Fasciani has failed to inform the registrar of OMVIC’s three refusals to register him as a motor vehicle salesperson, the evidence does not support this. On his application to RECO dated September 18, 2009 he answered the question “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 proceedings pending?” with “no” which I find was correct to his knowledge at the time. It is clear he was not served with the 2008 OMVIC NOP. Ms. Volpe testified Mr. Fasciani should have told RECO about the 2008 OMVIC NOP. In making this statement Ms. Volpe said she had no proof and was relying on her own experience. Ms. Volpe’s testimony on this point is not reliable because she had nothing to support her position. I find Mr. Fasciani was not served with the 2008 OMVIC NOP and could not have disclosed it. I also find that in the specific circumstances of this case, it was reasonable for Mr. Fasciani to believe that his OMVIC licence had expired because he was out of the motor vehicle sales business.

47On his applications to RECO for renewal on September 2013 and September 2015 he answered the questions “Any status of any kind refused, suspended, revoked, or cancelled? Any proceedings pending?” with “yes” which was correct, and he noted “previously disclosed” which was correct. Ian Daley, RECO’s counsel, represented RECO at the Tribunal pre-hearing on November 4, 2011 and was aware of ongoing OMVIC proceedings since that time as is evident from the Tribunal Order that the RECO NOP not be implemented, the proceedings concluded, the file closed and that Mr. Fasciani advise RECO of the outcome of his appeal Tribunal file 6484/MVDA and the Quick Credit action. In these circumstances, it is credible that Mr. Fasciani assumed RECO was already aware and he confirmed his assumption on his applications by answering “previously disclosed”. RECO would also have had knowledge because it was a party to the Tribunal Order. I find Mr. Fasciani’s responses correct in the particular circumstances of this case and that he did not knowingly give false answers.

48I find that Mr. Fasciani’s past conduct does not afford reasonable grounds for the belief that he will not carry on business in accordance with the law and with integrity and honesty. I have considered the whole of Mr. Fasciani’s conduct in finding that the respondent has not proven its case.

49Since 2009 when Mr. Fasciani was first registered as a real estate salesperson, he has been continually renewed. He has taken responsibility for his actions and admitted to sloppiness and testified that he can see the RECO’s point of view in hindsight. There is no evidence of any consumer complaints during the last 9 years in which he has been a real estate salesperson. His broker is supportive and wishes to continue to employ him as evidenced by the letter from his broker submitted at the hearing. There has been no evidence of any disciplinary action taken against him by RECO on any matters other than the subject matter of this appeal. He has never attempted to deny, hide or mischaracterize the protracted legal proceedings resulting from his failed motor vehicle dealerships.

50Mr. Fasciani is now 40 years old. He admitted he would not make the business mistakes now that he made as a young man in his twenties operating dealerships. He has no criminal record or any criminal charges pending. There is no evidence of any outstanding judgments against him. None of the allegations against him by OMVIC or Quick Credit have ever been proven. By all accounts he is a responsible real estate salesperson who has put the failed dealerships experience behind him.

51The 5 day time limit to disclose changes set out in s. 34(1) of Ontario Regulation 567/05 under the Act and the same requirement in the Conditions signed by Mr. Fasciani and his broker must be construed according to the circumstances. In the Regulation there is no definition of “change” and no specificity in the Conditions. Here, RECO and its counsel were involved in and aware of the OMVIC NOP’s and the RECO NOP. The matters that RECO claims were not disclosed to it by Mr. Fasciani have been within RECO’s knowledge for many years. RECO could have asked Mr. Fasciani to explain what he meant by “previously disclosed” if this answer was seen as insufficient. The interpretation of Mr. Fasciani that he had made all required disclosure is not unreasonable in these circumstances. Therefore, in this particular case the respondent has not proven, on a balance of probabilities, that Mr. Fasciani breached either the Regulation or the Conditions.

b. Is revocation of Mr. Fasciani’s licence appropriate?

52Given that the respondent has failed to prove its case, revocation of Mr. Fasciani’s licence is not appropriate. However, at the hearing Mr. Fasciani volunteered to abide by any conditions proposed by the respondent or the Tribunal and also volunteered to have his lawyer or accountant assist him in RECO applications or reporting. Respondent’s counsel declined to put forward any proposed conditions. The respondent submits Mr. Fasciani is ungovernable. This submission is not supported by the evidence.

53I find that that Mr. Fasciani is governable because he has applied to renew his licence as required and has answered all questions asked of him in the application to the best of his understanding at the time. Mr. Fasciani admits that in hindsight, he can see why the respondent was concerned with the answers he made on his application and is willing to give as much information as the respondent requires. This insight and volunteering to abide by conditions proves to me that Mr. Fasciani is governable and gives me reason to believe that he will comply with conditions. Conditions set out below shall attach to Mr. Fasciani’s licence as a salesperson under the Act.

ORDER:

For the reasons set out above I order the Registrar not to carry out the NOP. Mr. Fasciani’s licence as a salesperson shall be subject to the condition that Mr. Fasciani shall have his lawyer review his renewal application for the next two renewals and confirm such review to RECO at the time each application is submitted.

LICENCE APPEAL TRIBUNAL

_____________________________

Avril A. Farlam, Vice-Chair