Appeal from a Notice of Proposal of the Registrar, Real Estate and Business Brokers Act, 2002, S.O. 2002, c.30, Sch. C - to Refuse Registration
Between:
Warren Ifill
Appellant
-and-
Registrar, Real Estate and Business Brokers Act, 2002
Respondent
DECISION AND ORDER
ADJUDICATOR:
Stephen Scharbach, Member
APPEARANCES:
For the Appellant:
Susan Pennypacker, Counsel
For the Respondent:
Ian Daley, Counsel
Heard in Toronto:
January 31, 2018
DECISION AND ORDER
Introduction
1Under the Real Estate and Business Brokers Act, 2002, (“Act”), anyone who trades in real estate in Ontario as a brokerage, broker or salesperson must apply to, and be granted registration from, the Registrar appointed under the Act.
2On April 5, 2016, Mr. Warren Ifill (“appellant”) applied for registration under the Act as a salesperson.
3The Registrar issued a notice of proposal to refuse the appellant’s application on the grounds that his past conduct affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty. This is a ground for refusal under s. 10 of the Act.
4The past conduct upon which the Registrar mainly relies took place between approximately 2007 and 2010 while the appellant was registered as a motor vehicle salesperson and operated a company registered as a motor vehicle dealer under the Motor Vehicle Dealers Act, 2002 (“MVDA”).
5Both registrations were terminated by a decision and order of this Tribunal dated January 6, 2012 (“January 2012 decision”). In that decision, the Tribunal concluded that the appellant’s past conduct afforded reasonable grounds for belief that he will not carry on business under the MVDA in accordance with law and with integrity and honesty, and directed that the registrations of both the appellant and his company be terminated. That conduct is summarised below.
6That was in January 2012. In January 2016, the appellant applied for registration as a real estate salesperson. The Registrar proposes to refuse that application, mainly citing the appellant’s past conduct as found by the Tribunal in its January 2012 decision.
7The appellant’s position is that he made mistakes in the past but his current application should take into account his more recent conduct, including the fact that he has been granted three licences/registrations in two other regulated industries and there have been no issues or concerns with his conduct.
8As described in greater detail below, I conclude that the appellant’s past conduct does afford reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty, and I have therefore directed the Registrar to carry out his proposal to refuse his application as a real estate salesperson.
Issue
9The Registrar’s proposal to refuse cites 4 categories of the appellant’s conduct that, according to the Registrar, affords reasonable grounds for the belief that the appellant will not carry on business in accordance with law and with integrity and honesty:
fraudulent transactions related to automobiles in a “title-washing” scheme for salvage branded vehicles being imported from the US,
a criminal charge of “fraud over $5,000” (this charge was withdrawn at the time of the Tribunal’s 2012 decision and I gave it no weight in assessing the appellant’s suitability).
non-payment of retail sales tax by the appellant’s auto dealership company,
non-compliance with his legal obligations as director of the auto dealership company to manage and handle retail sales tax.
10All of the conduct cited above is described in the Tribunal’s findings contained in its January 2012 decision.
11The Registrar’s position is that the appellant’s conduct, as described in the Tribunal’s 2012 decision, affords reasonable grounds for belief that the appellant will not now carry on business in accordance with law and with integrity and honesty. Although that conduct took place several years ago, the Registrar’s view is that the appellant has not convincingly demonstrated any change or improvement that would alter the Tribunal’s earlier finding that the appellant was unsuitable.
12The appellant accepts the Tribunal’s 2012 findings but points out that the conduct referred to in that decision took place several years ago. Since then he has obtained licences/registrations in two other regulated industries, and there have been no criminal or POA charges, no complaints, or findings against him. He has supporting letters from his employers in the regulated industries who both state that they are aware of the Tribunal’s 2012 decision and have found the appellant to have acted honestly and professionally at all times. According to the appellant, his application should be judged on his present circumstances and not on the snapshot of his life from several years ago preserved in the Tribunal’s 2012 decision.
13The central issue is whether the appellant’s past conduct affords reasonable grounds for belief that the appellant will not carry on business in accordance with the law and with integrity and honesty.
14According to the Ontario Court of Appeal in Registrar, Alcohol and Gaming Commission of Ontario v. 751809 Ontario Inc. operating as Famous Flesh Gordon’s [2013 ONCA 157], the “reasonable grounds to believe” standard requires something more than mere suspicion but less than proof on a balance of probabilities. In other words, the Registrar does not have to show that that the past conduct of an applicant makes it more likely than not that he will not carry on business as required. The Registrar need only show that there are reasonable grounds for belief that his business will not be carried on in accordance with law and with integrity and honesty.
15In this case, the appellant’s past conduct that resulted in the earlier termination is clearly relevant, but so is his conduct since then. His past conduct in its totality must be considered, including the conduct that led to termination, his behaviour and conduct since then, and his present circumstances. Thus, in this case, it appears that the following factors are particularly relevant to the central issue:
the nature of the conduct that resulted in the earlier termination
any unique circumstance that would explain that conduct and indicate it is unlikely to re-occur
the length of time since the conduct occurred and any redeeming behavior during that time
16My assessment of those factors is set out below. After taking them into account, I have concluded that the appellant’s past conduct, considered in its totality, affords reasonable grounds for the belief that the appellant will not carry on business in accordance with law and with integrity and honesty.
A. Nature of the Conduct that Resulted in the Earlier Termination
17That conduct is described in the Tribunal’s 2012 decision. In summary it included the following:
The appellant’s dealership failed to remit retail sales tax to the Ontario Ministry of Finance. The Tribunal found that the dealership was just over $44,000 in arrears and had been in arrears since at least 2007. The dealership was not making any payments, and had made no arrangement with the Ministry to pay the outstanding amounts.
The appellant provided a customer with a phony bill of sale which included an inflated purchase price and false odometer reading to induce a bank to lend the customer money far in excess of the car’s real value. The transaction was barely documented and the car in question was never registered in the dealership’s name. The Tribunal concluded that “…it was a poorly disguised scam on the lending institution...”
The appellant accepted a car on consignment and sold it for $59,000. The receipt and sale of the car was undocumented. He gave the consignee $30,000, far less than the sale price, which the Tribunal found was “…in flagrant violation of the Regulation and an affront to honesty and integrity in the motor vehicle business.” Although the appellant apparently paid the consignee for the car and had no further financial interest in it, he placed a lien on the vehicle and six months later it was reported stolen. The Tribunal found the transaction to be “…a flagrant breach of the consignment provisions…a breach of the record requirements of the Act and a suspect insurance claim.”
The appellant’s dealership issued a Bill of Sale which facilitated the improper sale by an unregistered dealer of an irreparable, flood damaged vehicle to a consumer as a “rebuilt” vehicle. The Tribunal concluded the transaction “…was an outright breach of the prohibition on the sale of a water damaged vehicle and a scheme to enable a non-registered business sell a motor vehicle…”
The appellant, for a cost of $100 per vehicle, allowed auto repair shops to use his dealership’s access to an on-line vehicle auction service to purchase severely damaged or salvage cars in the US and import them into Canada. That violated his agreement with the auction service. He also signed and completed, in advance, a Canada Transport form for each vehicle. This form allowed their importation into Canada and indicated the vehicle’s brand and status which was then used for first registration in Ontario. The forms were falsified to conceal the “severely damaged” or salvage condition of the cars, and instead indicated a more favourable category such as “normal to minor damage”. The scheme allowed very damaged or salvage vehicles to be sold to Ontario consumers as roadworthy. Although there was no evidence to establish that the appellant himself falsified the forms or presented them for registration, the Tribunal found that the appellant’s actions, “…enabled … [auto repair shops]… to sell those vehicles to consumers in a condition that [the appellant] did not know about and did not care to know about.”
18This past conduct is very concerning for a number of reasons. Firstly, the appellant’s conduct did not involve an isolated transaction; he exhibited a lack of honesty and integrity over a number of transactions and over approximately three years.
19Secondly, it created a potential risk to the public and demonstrated the appellant’s willingness to place his own immediate financial interests ahead of both the interests of the vehicle buying public and his duty to adhere to the law.
20Thirdly, the context of the appellant’s past conduct is close to the context of the activities the appellant would be engaged in if registered as a real estate salesperson. The appellant was selling motor vehicles, which are high value assets whose value depended on their condition. He took part in schemes intended to misrepresent the condition of damaged or irreparable vehicles so that they could be sold to unsuspecting consumers for more than they were really worth. Real estate agents also sell high value assets to the public whose value significantly depends on their condition. A demonstrated willingness to mislead the public with respect to the condition and value of vehicles suggests that the appellant may be willing to misrepresent the condition and value of real estate assets. Therefore I find the appellant’s past conduct highly relevant to his suitability to be registered as a real estate salesperson.
B. Any unique circumstance that would explain that conduct and indicate it is unlikely to re-occur
21The conduct described above calls into question the appellant’s suitability to be granted registration.
22However, there may be many factors that contribute to objectionable behaviour. Such factors are no doubt varied and peculiar to each individual’s circumstances, but examples that readily come to mind are severe and unusual financial pressures, physical or emotional trauma, death of close family members, marital breakdown, alcohol or substance abuse, gambling addiction or mental health issues.
23If the evidence established that the objectionable conduct emerged from a unique set of circumstances or pressures that have now been addressed or changed so that a re-occurrence is unlikely, that may be a factor in favour of granting registration.
24In this case, although the appellant testified that he accepted the Tribunal’s findings, he provided no explanation or insight into why the conduct occurred, what motivated or contributed to it, or whether any steps have been taken to eliminate, or at least minimise, the likelihood of re-occurrence.
25As a result, I have no information that would allow me to conclude that the appellant has insight into the cause of his past conduct, or that changes have occurred that would make similar conduct unlikely if registration is now granted.
C. The length of time since the conduct occurred and any redeeming behavior during that time
26This factor generally weighs in the appellant’s favour. The questionable conduct described in the Tribunal’s 2012 decision took place several years ago, between 2007 and 2010. There is no evidence of any recurrence since then.
27According to the appellant, the Financial Services Commission of Ontario (“FSCO”), granted him licences as a mortgage agent (2012), a mortgage broker (2014), and as an insurance agent (2014).
28It also appears that the appellant disclosed, at least in his first application to FSCO, that he had been sanctioned under the MVDA. FSCO did not issue a notice of proposal to refuse, and granted the appellant’s applications. That seems surprising, given the strong nature of the findings in the Tribunal’s 2012 decision, and the fact that the appellant must have applied to FSCO for a licence within months of that decision.
29In any event, the appellant currently holds licences as both an insurance agent and as a mortgage broker and there have been no complaints or concerns about his conduct in either of those regulated industries.
30The appellant provided letters of support from the owners of the mortgage brokerage and the insurance agency for whom he currently works. Both owners stated that they were aware of the appellant’s past history as a motor vehicle dealer and were provided with a copy of the Tribunal’s 2012 decision. Despite that, they hired the appellant and both stated they had never received a complaint about him from either a client or the regulator.
31The appellant also provided a letter of support from the owner of a real estate brokerage who is willing to hire him as a sales person if registration is granted. The owner stated that he was also provided with a copy of the Tribunal’s 2012 decision, is aware of the appellant’s previous history as a motor vehicle dealer, but believes that the appellant is honest and trustworthy.
32One of the Tribunal’s 2012 findings was that the appellant had failed to remit sales tax to the Ontario Ministry of Finance since at least 2007. The appellant testified that he accepts responsibility for that and he is in the process of negotiating a resolution. He stated that the amount owing, currently at $44,405 plus interest, was assessed based on assumed business and industry averages. According to the appellant, he has been in touch with the Ministry of Finance in an attempt to negotiate a more accurate assessment and hopes to eventually settle that debt.
Conclusion
33After carefully considering the factors above, I have concluded that the appellant’s past conduct does afford reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty.
34The appellant’s conduct that resulted in the earlier termination was serious, prolonged, intentional, and placed the public at risk. To his credit, the appellant has been licenced in two regulated industries, has the support of his employers in these industries, and there is no evidence of any reoccurrence. However, in my view, given the nature of the misconduct, a period of participation in a regulated industry with no complaints or contraventions is not enough to overcome his past misconduct.
35I am troubled by the fact that the appellant provided no insight into why the conduct occurred, what motivated or contributed to it, and especially what changes have taken place that will address and minimize the likelihood of re-occurrence. In the absence of that, I conclude that the conduct found by the Tribunal in its 2012 decision continues to afford reasonable grounds for belief that the appellant will not be carry on business in accordance with law and with integrity and honesty.
36I have therefore decided to direct the Registrar to carry out his proposal to refuse the appellant’s application.
Order
37Pursuant to s. 14(5) of the Real Estate and Business Brokers Act, 2002, I direct the Registrar to carry out his proposal dated June 7, 2017 to refuse the application of Mr. Warren Ifill for registration as a salesperson under the Act.
LICENCE APPEAL TRIBUNAL
Stephen Scharbach, Adjudicator
Released: March 28, 2018