James Christopher Puddister v. Registrar of Motor Vehicle Dealers Act, 2002, 2020 CanLII 27442

Licence Appeal Tribunal

Safety, Licensing Appeals and Standards Tribunals Ontario

Tribunal d’appel en matière de permis

Tribunaux de la sécurité, des appels en matière de permis et des normes Ontario

Date: 2020-02-18

Appeal from a Notice of Proposal to Refuse Registration James Christopher Puddister o/a Puddy’s Auto Sales as a Motor Vehicle Dealer as per Section 9 of the Motor Vehicle Dealers Act, 2002, Chapter 30, Schedule B (the “Act”)

Between:

James Christopher Puddister (operating as ‘Puddy’s Auto Sales’)

Appellant

and

Registrar of Motor Vehicle Dealers Act, 2002 (“Registrar”)

Respondent

DECISION

Adjudicator: Zahra Dhanani, Member

Appearances:

For the Appellant: Self-Represented

For the Respondent: Vlad Bosis, Counsel

Place and date(s) of hearing:

Toronto,

November 19, 2019

REASONS FOR DECISION

OVERVIEW

1On November 19, 2018, the appellant submitted an application for registration as a motor vehicle dealer (MVD). His intention was to operate as a sole proprietor under the name ‘Puddy’s Auto Sales’.

2The Registrar of Motor Vehicle Dealers (“Registrar”) issued a Notice of Proposal to Refuse Registration (Notice) dated July 29, 2019, which proposed to refuse to register the appellant as a MVD.

3The Registrar’s Notice was based on sections 6(1)(a)(ii) and 6(1)(a)(i) of the Motor Vehicle Dealers Act, 2002, Chapter 30, Schedule B (the “Act”), namely that the appellant’s past conduct and financial position disentitle him to registration.

4The appellant appealed the Notice to the Licence Appeal Tribunal (Tribunal). A hearing was held on November 19, 2019.

5Three witnesses testified: Ms. Laura Halbert (Deputy Registrar MVDA), David Dailey (Compensation fund Manager, MVDA) and the appellant.

ISSUES

6Based on the Registrar 's noted concerns, the following questions must be answered:

a. Does the appellant’s financial position mean that he cannot reasonably be expected to be financially responsible in the conduct of his business?

b. Does the past conduct of the appellant afford reasonable grounds for belief that the appellant will not carry on business in accordance with law and with integrity and honesty?

RESULT

7For the reasons set out below, I find that the appellant’s current financial position does not establish that he cannot reasonably be expected to be financially responsible in the conduct of his business.

8However, the evidence establishes that the appellant’s past conduct affords reasonable grounds for belief that he will not carry on business as a MVD in accordance with the law, with integrity and honesty. I therefore confirm the Registrar’s Notice.

LAW

9Section 6(1)(a)(i) -(ii) of the Act states:

6 (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 financial 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 law and with integrity and honesty,

10The Tribunal may direct the Registrar to carry out the proposal or refrain from carrying it out and to take such action as the Tribunal considers the Registrar ought to take in accordance with this Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of the Registrar.

11The Registrar bears the burden of proving at least one of the two grounds for refusing registration. The standard of proof that applies to the grounds raised is “affords reasonable grounds for belief”, which is a lower standard of proof than a balance probabilities.

EVIDENCE AND ANALYSIS

Does the appellant’s financial position show that he cannot reasonably be expected to be financially responsible in the conduct of his business?

12For the reasons that follow, I find that the appellant’s current financial position does not lead me to conclude that he cannot reasonably be expected to be financially responsible in the conduct of his business.

13The financial information the appellant provided the Registrar establishes that the appellant has no funds of his own to operate the business. The appellant secured $10,000 from a private investor to whom he would make monthly payments with an annual interest rate of 10%.

14The appellant plans to purchase three cars valued between $2,000 to $3,000 and re-sell them at approximately $5,000 each. The appellant will have to pay $600 per month in rent and $300 per month to pay his investor loan. The appellant has not factored in other expenses such as insurance, marketing, printing, equipment etc.

15Based on just the funds required to buy the cars at the lower end of his expectations, pay the rent and make the payment to the investor, the appellant requires $7,000 - $9,000 to start his business.

16His expectation would be to start selling cars immediately and replenish his stock slowly with a goal of having approximately 5 cars at any given time.

17The appellant’s business plan does include any financial contingencies to cover any problems with selling the cars immediately or other issues that may arise. In business, unexpected problems and costs always come up and this is a clear gap in his plan.

18The appellant plans to have a very small dealership. While his financial plan does not take into account all the potential costs, I do believe that it is feasible for someone to start such a business with just $10,000.00. While his current financial position is not abundant, it would be sufficient given his modest plans for his dealership.

19While the current financial situation is not ideal, on this ground alone I do not find that the Registrar has established that there are reasonable grounds to believe that the applicant cannot reasonably be expected to be financially responsible in the conduct of business.

Does the past conduct of the applicant afford reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty?

20I find 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.

21The appellant previously operated a dealership which experienced serious financial problems ultimately resulting in two bankruptcies, unpaid customer and revocation of his registration.

22The appellant has not convinced me that his circumstances have changed so as to prevent him from having the same issues should be permitted to operate another dealership.

23Between June 2006 and June 2011, the appellant operated a dealership called “World Motor Car” in North Bay, Ontario.

24The appellant has previously filed for two separate bankruptcies.

25The first bankruptcy was discharged on May 30, 2001. At that time the appellant found himself in arrears with his taxes to the Ministry of Revenue for approximately $50,549.41. The appellant also owed money to three different lenders/investors, with one of them being owed $117, 385.00

26The second bankruptcy (also related to his operation of a MVD) was discharged on June 13, 2014. At that time the appellant was in debt for approximately $291,000.00.

27As a result of his financial situation, the appellant let his registration lapse and abandoned his MVD. Towards the end of his registration the Registrar had issued a Notice of Proposal to Revoke Registration (Notice 2011).

28At that time, he abandoned his MVD the appellant owed some customers money and had also failed to honour some repair commitments. This resulted in two claims that were paid by the Motor Vehicle Dealers Compensation Fund (Fund) to his customers totalling $4,955.

29The appellant fully compensated the Fund in May of 2019. The appellant was required to make this payment in order to be eligible to apply for re-registration as a MVD.

30The appellant testified that he suffered from severe mental health issues that had not been treated until more recently. He submitted that his erratic behaviour had been partly the result of his mental health issues, which he now had managed and that he was in a place in his life where he was coping well. He stated that he was excited about the changes around his health and looking forward to working with cars again.

31The Registrar submitted that because of the appellant’s past conduct when he was running his previous dealership he cannot be trusted to act in accordance with the law.

32I agree. There was no evidence before me that the appellant would administer his business more responsibly than he did in the past or will carry on business in accordance with the law and with integrity and honesty.

33It is clear that the appellant has been through some extremely challenging times due to his health. I believe his testimony that his health has improved and as a result he is in a better position to move towards a productive future. Aside from his testimony there was no other evidence (such as medical evidence) that was submitted to support the appellant’s position that he was able to function under the stress of running a business again/differently from the past.

34However, the appellant’s health was not the reason for his unsuccessful businesses. According to the appellant, his lack of success was due to circumstances in his environment. I find that from the evidence before me it was also because of poor business decisions. The appellant kept deferring his tax payments and using that money to keep his business going. Unfortunately, he created such immense debt loads that he was not able to come out from under them.

35There is no substantial evidence that would allow me to conclude that the appellant is now in a position to run a successful dealership after having had two businesses that ended up in bankruptcies.

36This determination is supported by the fact that since his last bankruptcy he has not run any other business, held a full-time job nor did he have any contingency plans should he not get the MVD registration.

37After denying the appellant’s MVD registration, the Registrar had offered the appellant a license to be a motor vehicle sales person, which would have given the appellant the opportunity to prove that he could be successful at car sales for a sustained period of time. This would have bolstered his application for an MVD. The appellant was not agreeable to this offer.

38The appellant testified that he did not want this because he did not have the personality to work for someone else and he wanted to have his own business.

39Unfortunately, the appellant had two chances to prove himself capable of fulfilling his obligations as a MVD but he was not able to run his financial affairs in a way that complied with the law. Having incurred debts amounting to over $200,000 both times does not engender any trust that the appellant can handle his financial affairs in accordance with the law.

40The appellant relied on his submission that he was in a better health position and so he is ready to run his own business again, that is not sufficient in the circumstances given the very serious problems he had with his previous dealership.

CONCLUSION

41For the reasons stated above, I confirm the Registrar’s Notice.