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Date: 2021-11-10

Appeal from a Decision of the Board of Trustees, Motor Vehicle Dealers Compensation Fund, to Deny a Claim

Between:

Pin Li

Appellant

and

Board of Trustees, Motor Vehicle

Dealers Compensation Fund

Respondent

DECISION AND ORDER

ADJUDICATOR: Harriet Lewis, Member

APPEARANCES:

For the Appellant: Self-represented

For the Respondent: Husein Panju, Counsel

Heard by Videoconference: September 21 & 22, 2021

REASONS FOR DECISION AND ORDER

OVERVIEW

1This is an appeal of the decision of the Board of Trustees (the “Board”) of the Motor Vehicle Dealers Compensation Fund, (the “Fund”), issued on March 29, 2021. In its decision the Board denies the appellant’s claim against the Fund.

2The appellant claims against the Fund arose from the purchase on June 25, 2018 of a 2008 BMW car (“the vehicle”) for her son, from Endras BMW (Endras). The vehicle was sold to the appellant’s husband “as is”, requiring repairs to make it roadworthy and certifiable.

3A short time after the purchase and certification, the appellant noticed the vehicle was leaking oil which soiled the driveway. This led the appellant to take several actions before she made a claim on the Fund.

4First, on October 19, 2018, the appellant wrote to Endras complaining about the vehicle and asking to return it for a refund. Hearing nothing from Endras by mid November 2018, the appellant filed a complaint against Endras with the Ontario Motor Vehicle Industry Council (OMVIC).

5The request to return the vehicle was refused. The OMVIC complaints process led to a nominal offer in early May 2019 which the appellant declined to accept, choosing instead to bring a small claims court action against Endras for damages.

6On September 9, 2019 the appellant received a judgment in the small claims court action: $500 for oil stains on their driveway, plus costs and prejudgment interest of a further $400. That amount was eventually recovered from Endras.

7The appellant remained dissatisfied with the actions of both Endras and OMVIC and looked to the Board for a remedy. The Board denied the claim on the basis that it did not meet the strict criteria set out in subsection 79(3) of Regulation 333/08, (the “Regulation”).

8While the appellant remains generally dissatisfied with her dealings with Endras, OMVIC and the Board, the issue before this Tribunal is whether the appellant qualifies for a payment from the Fund. The respondent asserts that unless an appellant’s case falls within the parameters set by the Regulation, the Board is not authorized to allow the claim.

FINDING

9Having heard the evidence and arguments of each of the parties, for the reasons set out below, and in accordance with the Tribunal’s authority, I refuse the allow the claim and dismiss the appeal.

THE EVIDENCE

10Much of the appellant’s evidence was directed towards her disappointment about not being able to return the vehicle and the way in which the claim against Endras was handled by OMVIC. The appellant maintains that the processes do not sufficiently consider the circumstances of the consumer.

11Ms. Li, and Mr. Zhang, the appellant’s spouse, testified. Two further witnesses also attended under subpoena: Rob Leccese, the General Manager of Endras, and Ryan Little, an OMVIC Complaints Officer.

12David Dailly, the Manager of the Fund, was the only witness for the respondent.

The Appellant’s Evidence

13Mr. Zhang’s is a retired banker and business consultant with an MBA from an Australian university. His evidence concerned the purchase of the vehicle and the arrangements to have it repaired and certified.

14According to Mr. Zhang, both he and Ms. Li visited Endras to view the vehicle after seeing it for sale online. On their first visit they took some pictures of it and returned the following day to buy it. A copy of the “Offer to Purchase” the vehicle, in the name of Guowei Zhang as purchaser, was attached to the Notice of Appeal and was made an exhibit in the proceeding.

15Mr. Zhang acknowledged that the Offer to Purchase contained the words “uncertified” and “as is” as well as a statement that the vehicle was being purchased on that basis. On the top left side of the document beside the heading “Sp. Status” were the words “As Is – Uncertified” which was initialed.

16On the right hand side of the Offer to Purchase, also initialed was a paragraph headed by the words “VEHICLE SOLD “‘AS IS””, which paragraph states as follows: “The motor vehicle sold under this contract is being sold “as is” and is not represented as being in roadworthy condition, mechanically sound or maintained at any guaranteed level or quality. The vehicle may not be fit for use as a means of transportation and may require substantial repairs at the purchaser’s expense. It may not be possible to register the vehicle in its current condition”.

17At the bottom of the document are the words “Sales Final” as well as two instances where the signatory is cautioned to review or read the entire contract before signing.

18Mr. Zhang identified his initials and signature on the document. He did not comment on any discussion with the Endras salesperson, agreeing only that he had signed the document and paid the purchase price. He acknowledged receiving an “Operation Summary” provided with the Offer to Purchase. That document, entered as part of the appellant’s evidence, lists several items on the vehicle which required repair or replacement, along with estimates of the parts and labour required to do that work. One of the items noted was the replacement of the valve cover.

19Mr. Zhang said that he then took the vehicle to Baygreen Auto Collision, (“Baygreen”) a firm with which he had previous dealings. Baygreen made some repairs and provided some parts for the vehicle consistent with but not identical to those described in the Operation Summary. For example, it did not replace the valve cover as recommended, but only the gasket. Baygreen also certified the vehicle which was then registered in Mr. Zhang’s name.

20A few months later he and the appellant noticed that the vehicle leaked oil which left stains on their driveway. Mr. Zhang took the vehicle to a different BMW dealership for an assessment of the cause of the oil leak. A copy of the assessment from BMW Markham dated October 6, 2018, was put into evidence as an exhibit. That assessment recommended the replacement of the valve head and gasket. Mr. Zhang said that he was told that no guarantee could be given that any such repairs would prevent future oil leaks. He decided not to incur the expense of having the additional repairs done. He did not take the vehicle back to Baygreen to see if they could fix the problem. He took no further steps with respect to the vehicle, and turned over responsibility for the pursuit of any claims to Ms. Li.

21Family members continued to drive the vehicle until the COVID-19 pandemic kept their son at home. Since then the appellant has suspended the insurance coverage on the vehicle and it has been sitting on a pad on their driveway.

22Mr. Rob Leccese was the appellant’s next witness. Mr. Leccese has been in the automotive business for several years, largely with Endras, where he is currently its General Manager. He was not personally involved in the sale of the vehicle to the appellant. Ms. Li questioned him about the responsibility of a vehicle dealership to disclose defects in used automobiles offered for sale, and Mr. Leccese noted repeatedly that in this case, it was clear that the vehicle was being sold “as is” with no guarantees and that the price reflected its need for substantial repairs. He also said that the practice of the dealership in cases where such vehicles are being sold is to ask a purchaser to read the “as is” clause or for the salesperson to read out the clause prior to the purchasers placing their initials beside it.

23Ms. Li also questioned Mr. Leccese about the delayed payment of the small claims court judgment which was not paid until she issued a garnishment order. Mr. Leccese said that all material regarding payments is handled by the firm’s financial officer and that would have been the case here.

24Ryan Little has been an OMVIC Complaints Officer for 4 years. Ms. Li’s complaint against Endras came to him on referral from an OMVIC enquiry representative in October, 2018. He testified that he originally understood that the appellant had wanted to return the vehicle for a refund and be compensated for the cost of the repairs and staining on the driveway. He later learned the appellant also wished compensation arising out of a recall of the vehicle model for air conditioning repairs. He opened the file for mediation and attempted to contact Endras on several occasions to see if any settlement could be obtained. Eventually he presented a nominal offer to the appellant, which was refused, and he closed his file. In his closing letter to the appellant he advised her that if Endras had not yet paid the small claims court judgment, the appellant may have a claim to the compensation fund.

25Ms. Li’s evidence concerned her efforts to obtain restitution in various venues for costs arising from the purchase of the vehicle. She is a registered real estate agent and testified that her efforts in pursuing this matter greatly affected her real estate business and the appellant’s life in general over the period since the vehicle purchase.

26She does not dispute Mr. Zhang’s evidence concerning the purchase and repair of the vehicle. She also agrees that no notice was given to Endras of the appellant’s wish to return the vehicle until approximately 4 months after its purchase.

27The substance of her evidence focussed on her frustration with Endras’ failure to engage with her, including its failure to pay the small claims court judgment until she (successfully) instigated garnishee proceedings. She also expressed disappointment and frustration with the OMVIC and Board processes which she believes took too long and are unfair to the consumer.

The Respondent’s Evidence

28David Dailly is the Manager o the Fund. His role is to prepare applications for compensation for consideration by the Board.

29He acknowledged receipt of the documents forming the basis of the appellant’s claim including the Offer to Purchase the vehicle and the small claims court judgment. He confirmed that the price paid for the vehicle and the cost to the appellant to repair it were the subject of the claim to the Board.

30Mr. Dailly acknowledged that the processing of the appellant’s claim to the Board took a long time. He said that he had worked with Ms. Li over that time to get her application “in the best spot” for consideration given the circumstances. The basis of the claim was that the dealer failed to disclose an oil leak and had the obligation to do so. The Board found no such obligation based on the dealer’s statement of “as is” condition of the vehicle at the time of the sale.

31The remainder of his evidence centred on the criteria that must be met to ensure a successful claim to payment from the Fund as set out in the legislation.

THE LEGAL CONTEXT GOVERNING COMPENSATION FROM THE FUND

32As Mr. Dailly testified, the fund is a creature of statute and regulation and the authority of the Board is constricted by the legal regime established for its considerations. So too this Tribunal is bound by those constrictions. To succeed on a claim for payment from the Fund, an applicant must meet the strict criteria established by the law.

33This is made clear by s.42 of the Motor Vehicle Dealers Act, S.O. 2002, c. 30 Sched. B. (the “MVDA”) which establishes the Fund. Subsection 42(5) provides that if a customer makes a claim for compensation from the fund, the entitlement “shall be determined using the prescribed criteria in accordance with the prescribed procedures”. The onus is on the claimant to show that the prescribed criteria are met.

34The power of this Tribunal in an appeal of a decision of the Board is set out in s. 85(7) of the Regulation. The Tribunal may either allow or refuse the claim.

35Regulation 333/08 sets out in detail the criteria that are prerequisites for a successful claim to the fund. This Tribunal must first consider the criteria in determining whether an appellant qualifies for a payment.

36The Regulation limits claims for compensation to those arising from pecuniary loss and in s. 79(1) establishes the 5 criteria for a claim, all of which must be met by an applicant. These criteria are as follows:

a. The claim arose from a trade of a motor vehicle between a customer and the dealer;

b. The claim meets the requirements set out in a paragraph of subsection 3; (emphasis added)

c. At the time of the trade the dealer was a registrant;

d. The customer was acting in the trade as a consumer; and

e. The customer has given the dealer a written notice of demand for payment of the claim and the dealer has refused to pay or is unable to do so.

37There is no issue in this case about the existence of criteria a, c, d and e, of 79(1), all of which existed in this instance. Only “b” must be considered.

38Section 79(3) establishes the 11 requirements for a claim made under 79(1) b. Paraphrased, they are as follows: (comments in italics added).

The dealer was subject to a proposal to suspend, revoke or not renew its licence. (not applicable)
The dealer was convicted of an offence. (not applicable)
The vehicle was seized by a law enforcement authority. (not applicable)
The vehicle was seized by a creditor other than the purchaser. (not applicable)
The claim arose from a deficiency that the dealer refused to remedy and the deficiency is something that either the vehicle does not have and the customer had indicated was material to the trade for the vehicle to have, or the vehicle has and that customer indicated it was material to the trade that the vehicle not have. (possibly applicable)
The vehicle wasn’t delivered but a deposit was made. (not applicable)
The claim is in respect to a warranty. (not applicable)
The claim is in respect to a service plan. (not applicable)
The claim is for another type of refund owed to the customer. (not applicable)
The claim is in respect to a court judgment against the dealer for payment. (not applicable)
The dealer is bankrupt. (not applicable)

ISSUES

39Given the foregoing criteria, the issue to be determined is whether the claim of the appellant falls under s. 79(3)5.

ANALYSIS

40Based on the admissions of both Mr. Zhang and Ms. Li, as well as the documents entered into the record, the evidence is clear that the vehicle was sold to them “as is”. That was acknowledged both in testimony and by the signature of Mr. Zhang in several places on the Offer to Purchase.

41There was also evidence in the form of the Operation Summary attached to the Offer to Purchase that certain repairs were required to make the vehicle certifiable and ready to drive. There was confirmation from Mr. Zhang that notwithstanding that some of the repairs were made, when problems arose and additional work was recommended, he chose not to have that work done.

42There was no evidence given by the appellant or any of her witnesses that the purchasers told Endras that it was material to the transaction that the vehicle had no conditions that might result in an oil leak.