George Parasco o/a UR Auto Sales v. Registrar, Motor Vehicle Dealers Act, 2002, 2019 CanLII 25799

George Parasco o/a UR Auto Sales v. Registrar, Motor Vehicle Dealers Act, 2002

Date: 2019-01-15 Tribunal File Number: 11385/MVDA

An Appeal of a Notice of Proposal by the Registrar, Motor Vehicle Dealers Act, 2002, S.O. 2002 c. 30, Sched. B – to Refuse Registrations

Between:

George Parasco o/a UR Auto Sales

Appellant

and

Registrar, Motor Vehicle Dealers Act, 2002

Respondent

REASONS FOR DECISION AND ORDER

Adjudicator: D. Gregory Flude, Vice-Chair

APPEARANCES

For the Appellant: Self-Represented

For the Respondent: Vlad Bosis, Counsel

Heard in Toronto: September 27, 2018

OVERVIEW AND ISSUES

1The appellant, George Parasco, applied for two registrations on June 20, 2017: as a motor vehicle salesperson and as a motor vehicle dealer. He intends to operate the dealership under the name, UR Auto Sales. The Registrar under the Motor Vehicle Dealers Act, 2002 S.O. 2002 c. 30, Sched. B ( the “Act”) denied Mr. Parasco’s registrations on two grounds:

a. He had made false statements in his applications; and

b. He has failed to comply with a request from the Registrar for information when asked.

Mr. Parasco has appealed the Registrar’s decision to this tribunal.

2The basis for the allegation that the appellant made false statements is a credit report the Registrar ordered. The appellant stated in his application that he was not subject to any outstanding judgments or collection actions. The credit report purports to show a number of collection actions. During the hearing, the Registrar conceded that the amount alleged to be outstanding is significantly less than an initial review of the credit report might suggest. The appellant denies any current collection actions and testified that he has not been contacted by anyone seeking payment. If he were to be contacted, he would dispute the claim as he is unaware of any debts.

3There is no dispute over the fact that the appellant has refused to disclose information to the Registrar. The dispute turns on the question of whether the disclosure the Registrar is seeking goes beyond what disclosure the Registrar might reasonably require.

4There are two broad categories of non-disclosure in dispute. One relates to three other corporations in which the appellant has or has had an interest. The second addresses the balance in the appellant’s bank account several months before he applied for registration. On the bank balance issue, the appellant made a substantial deposit and then set aside funds from that deposit as start-up capital for his dealership. The Registrar asked the appellant to verify the source of the substantial deposit. The appellant refused, taking the position that the Registrar was overreaching.

5Having reviewed all of the evidence, I find that the appellant did not make a false statement in his applications for registration. I also find that the appellant has failed to comply with s. 6(1)(g) of the Act by failing to provide the Registrar with information requested under s. 6(1.1) of the Act.

FACTS AND ANALYSIS

6The appellant filed two applications with the Registrar on June 20, 2017. One was seeking registration as a salesperson and the second was seeking registration as a dealer under the business name, UR Sales. He dealt with Lynda Huynh, a Senior Registration Officer at the reception desk at the Registrar’s offices. In her testimony, Ms. Huynh stated that she noted there was a business application and gave the applicant a Dealer Application Checklist. The checklist has two particular entries of interest – a requirement for documents regarding the source of funds and proof/verification of the source of funds. She hand wrote on the checklist: “Further documents may be required upon review.”

7The appellant placed great importance on the checklist. In responses to the Registrar during the application process, he denied information based on the fact that it was not spelled out as a requirement in the checklist. He also took issue with Ms. Huynh altering “an official document” by writing in further requirements. Ms. Huynh testified that the checklist was not an official document. It was simply a document to help applicants ensure they included all of the required information. It is not part of the application. She also emphasised that she always points out to business applicants that the registration department may need more information. This is why she made the handwritten comments on it to aid the appellant.

8As part of his application, the appellant had included two bank statements. One was a business account bank statement showing an opening balance of $50,000 operating capital. The second was his personal bank account statement from March 31, 2017 showing a balance of $406,162.85. In his evidence, the appellant stated that he wanted to show the Registrar that he was well capitalised and could easily manage the $50,000 initial start-up capital.

9On July 19, approximately six weeks after receiving the application, the Registrar’s staff wrote to the appellant seeking answers to 19 questions. Of note, in these questions was question 19 asking the appellant to identify the source of a deposit of $576,534 on March 15, 2017 and a transfer out of $55,500 on March 31, 2017. The appellant identified the deposit as proceeds from a personal property sale and the transfer out as a transfer to his tax free savings account in his September 11, 2017 response.

10The Registrar also highlighted several related businesses: Parasco Morrish Inc., Parasco Leslie Inc., and Parasco Kennedy Inc. The appellant identified the Morrish and Leslie corporations as real estate holding companies that required little of his time. He stated that the Kennedy entity had been sold in 2008.

11The Registrar had also asked for tax returns for the three corporations for the previous two years. The appellant answered that they would have no involvement in UR Auto Sales so their tax returns were not relevant.

12The Registrar was unsatisfied with the appellant’s response to a number of questions. Nita Castro, the Senior Registration Officer handling the application wrote to the appellant on October 18 restating the unanswered questions. She advised the appellant that the Registrar still needed disclosure of personal and corporate tax returns and an explanation of the two identified transactions on the March 31, 2017 bank statement. The next day the appellant informed Ms. Castro that he would not provide the requested information and insisted that his application be processed. Ms. Castro forwarded the application for approval by senior management. The application was denied.

False Statement - Section 6(1)(a)(iii)

13As stated above, the appellant answered “No” to the question in his application asking if there were any outstanding collection actions. In reviewing the file, the Registrar ordered a consumer credit report from TransUnion, a credit reporting agency. The Registrar’s initial review of the report led to the conclusion that there were collection actions in the amount of $16,305. Later in the report, in a section entitled “Collections” the report alleges that there are three current collection actions against the appellant totalling $2,836, and this is the amount the Registrar alleges the appellant failed to disclose on his application. There are two entries related to Rogers in the total amount of $2,712 and one related to Comwave in the amount of $124.

14The appellant testified that he is unaware of any collection actions against him. In his written reply about this issue to the Registrar he stated: “There are no payments due, Collection (sic) amounts are in dispute.” In his testimony at the hearing, the appellant stated that he has never been contacted by Rogers or Comwave about any outstanding accounts and, to his knowledge, he owes nothing. In cross-examination the Registrar put it to the appellant that his written answer differs from his oral testimony. If he is unaware of the collection actions how could he answer that they were in dispute. The appellant replied that he is unaware of any outstanding collection actions and, if he were to be contacted, he would dispute them.

15Other than the credit report, the Registrar led no other evidence with respect to these collection items. I heard nothing from Rogers or Comwave or their collection agents about the amounts outstanding or dealings with the appellant. The only evidence other than the credit report is the appellant’s denial. I accept the appellant’s evidence. At the hearing the appellant led evidence showing that he had a current bank balance well into six figures. He certainly has the resources to pay these relatively minor amounts. This leads me to conclude that he is unaware of these amounts.

16I am satisfied that the appellant did not make a false statement in his application when he answered “No” to the question about outstanding collections. I find that the appellant has not breached of s. 6(1)(a)(iii) of the Act

Failure to Disclose Information – Sections 6(1)(g) and 6(1.1)

17The appellant’s Notice of Appeal sets out the basis for his objections to disclosing the information requested by the Registrar. When reviewed in light of the Registrar’s gate-keeping function to ensure that registrants meet the requirements for registration both on initial application and on an ongoing basis, it becomes clear that the Registrar’s requests for information are not overreaching or unreasonable.

18While the Notice of Appeal is unstructured, the following grounds can be extracted:

• The Registrar’s refusal to grant a licence offends the appellant’s constitutional right to employment;

• The appellant’s human rights are being violated;

• The Registrar’s request for further information is insulting, humiliating and degrading;

• Once disclosed, the appellant’s personal and corporate information will become part of the public record;

• The Registrar’s request for personal and corporate tax documents and financial information is an invasion of privacy; and

• The appellant is a first time applicant with no prior history with OMVIC so his approval should have been completed swiftly.

19It is most practical to address the constitutional and human rights questions together. The appellant failed to comply with s. 11 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure, Version I (October 2, 2017). That section requires the appellant to serve a Notice of Constitutional Question on the Attorney’s General of Canada and Ontario. Further the appellant did not point to any section of the Charter of Rights and Freedoms or any other constitutional provision that he alleges has been breached, particularly, or any section that guarantees the right to employment.

20Similarly, the appellant did not identify any protected ground on which he alleges discrimination. In fact, at the hearing he did not lead any evidence or make any submissions about these grounds. In the absence of submissions and evidence, I cannot find that the Registrar has discriminated against the appellant on any protected Charter or human rights grounds.

21It is not immediately apparent to me how this request for information can be insulting, humiliating and degrading as the appellant alleges. Nor did the appellant enlighten me during the hearing. No evidence was led on this point. As with the Charter and human rights allegations addressed above, in the absence of evidence, I can make no finding in the appellant’s favour.

22The appellant expressed a great interest in protecting his personal financial information. It is not an understatement to say that this factor was his motivating factor throughout his argument. It is, at least partly, based on a misunderstanding of the Registrar’s role in protecting information. When this issue was raised during the hearing, there was a discussion around the provisions of s. 36 of the Act that protect the confidentiality of information received by the Registrar, except in certain enumerated circumstances, such as proceedings before this Tribunal. The appellant was unaware of this provision and had the misapprehension that his personal information would become part of the public record simply by virtue of being in the Registrar’s files.

23The substantive grounds for the appeal are really set out in the last two grounds: the Registrar’s actions are an invasion of privacy and, as a first time applicant, the appellant’s application should have been approved without the in-depth investigation the Registrar carried out.

24The appellant is seeking for the first time to carry on business in a highly regulated industry. The goal of regulation in that industry is consumer protection. To ensure the goal is achieved, the Registrar is given broad powers to investigate applicants for initial registration. By applying for registration, the appellant has brought himself within the scope of those powers such that their exercise does not become an invasion of privacy as long as the Registrar within the scope of the powers granted by the Act. The obligations were voluntarily assumed by the appellant when he sought registration.

25I do not find the Registrar was acting unreasonably when asking for details of major fund transfers or corporate and personal tax returns. Section 6 of the Act sets out a number of factors that would disentitle an applicant to registration. Two are of particular note: financial responsibility and carrying on business in accordance with law and with integrity and honesty. In screening new applicants, the Registrar is entitled to review the whole history of an applicant to determine their fitness to carry on the business of a car dealer and car salesperson.

26The appellant appears to have misunderstood the Registrar’s role. It is the appellant’s view that his applications should have been fast-tracked because he is a new entrant into the car business with no regulatory history. I do not find unreasonable the Registrar’s position that the lack of history means her must take a broad look at the appellant’s business and financial dealings to ensure that he meets the requirements.

27The appellant does not argue that the Registrar’s requests are onerous. Starting with the request for the source of the $576,000, he does not deny that his lawyer kept a trust ledger, he just refuses to ask the lawyer for a copy. Similarly, he refuses to disclose corporate tax returns and financial information, not because it is onerous, but because he believes it is none of the Registrar’s business. Details of his tax free savings account are solely in his control.

28I find that the Registrar made a request for relevant information under s. 6(1.1) of the Act. As the appellant has failed to provide that information the Registrar has established grounds for disentitlement to registration under s. 6(1)(g) of the Act.

REMEDY

29The registration provisions in the Act embrace a presumption of entitlement to registration subject to certain exceptions. One of those exceptions is s. 6(1)(g), the failure to respond to a request for information made by the Registrar under s. 6(1.1). Thus, the appellant may be refused registration. I am of the view that such an outcome is too harsh in the context of this application. The preferable way forward is to give the appellant the opportunity to consider his options and disclosure obligations in a regulated industry and decide if he still wants to seek registration.

30In coming to this decision, I note that no allegations of dishonesty have been leveled against the appellant. While the Registrar points to the appellant’s lack of cooperation as proof of his ungovernability, the evidence discloses to me that he had serious concerns about the protection of his financial information. By virtue of my decision, it must now be apparent to the appellant that, when working in a regulated industry, he does not have the option of choosing which information relating to his business dealings he discloses to the Registrar and which he withholds.

31In my view, the best way forward is to give the appellant the opportunity to respond to the Registrar’s request for information. I will defer issuing a final decision in this matter on the following terms:

a. The appellant will have six weeks from the date of the release of this order to provide the Registrar’s with the as yet undisclosed documents set out in the Registrar’s email dated July 19, 2017 or to advise the Registrar that he is withdrawing his application.

b. The parties will attend a telephone case conference within ten weeks of the release of this decision to discuss the status of the application and to set continued hearing dates, if necessary.

c. If the appellant decides to withdraw his applications for registration, he shall file a Notice of Withdrawal form with the tribunal and the tribunal will close its file.

d. If the Registrar is satisfied with the disclosure received from the appellant and proposes to register him, he shall immediately notify the tribunal, file a Notice of Withdrawal form and the tribunal will close its file.

e. Notice of Withdrawal forms may be found on the tribunal’s website at https://slasto-tsapno.gov.on.ca/lat-tamp/en/general-service/forms/.

f. I am seized of this matter.