Appeal under Section 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8 from a Cancellation and Seizure Order issued by the Registrar of Motor Vehicles pursuant to Section 47 and 47.1 of that Act
Between:
DGMS Management Services Inc.
Appellant
and
Registrar of Motor Vehicles
Respondent
DECISION AND ORDER
ADJUDICATOR:
Harriet Lewis, Member
APPEARANCES:
For the Appellant:
Self- Represented
For the Respondent:
Patrick Moore, Counsel
Heard by Videoconference:
October 5, 2021
BACKGROUND
1DGMS Management Services Inc. (“DGMS”) appealed to this Tribunal from the cancellation and seizure order dated April 8, 2021 issued by the Registrar of Motor Vehicles (the “Registrar”) pursuant to sections 47 and 47.1 of the Highway Traffic Act, R.S.O. 1990, c. H.8 (the “Act”). DGMS is owned and operated by Delon Bovell.
2The Registrar bases its decision to issue the cancellation and seizure order on two grounds.
a. That Degenaral Management Inc., a former holder of a Commercial Vehicle Operator’s Registration (“CVOR”), and Degenaral Trucking Services Inc. (a former plates holder) (referred to as “Degenaral Management” and “Degenaral Trucking” and cumulatively as “Degenaral”), and their principals Dillion Bovell (“Dillion “) and Juanita Charlemagne (“Juanita”), are “related persons” to DGMS and its principal Delon Bovell (“Delon”), and therefore, the poor safety rating of Degenaral should be grounds for dismissing the appeal.
b. That DGMS has had an unacceptable safety record since its registration in 2018 which on its own warrants a cancellation and seizure.
3Degenaral Management’s CVOR was cancelled on April 12, 2018 based on its poor safety record. Degenaral Trucking’s plates were seized on April 2, 2018 and its subsequent application for a CVOR was refused in part on the basis that it was a related person to Degeneral Trucking.
4DGMS acknowledges the personal connections with and early involvement of Dillion and Juanita in its business. Dillion and Devon Bovell (“Devon”) are Delon’s younger brothers and Juanita was Dillion’s girlfriend. DGMS denies that Dillion and Juanita are currently involved with DGMS nor were they ever in positions of authority with DGMS. It submits that the safety record of Degenaral should not determine DGMS’s right to operate commercial vehicles. It also argues that it has taken serious steps and made significant improvements in its business to ensure that it operates safely and asks for a “second chance” based on those improvements and its safety plan.
5Having heard the evidence of the parties, for the reasons below, I have determined to set aside the Registrar’s Cancellation and Seizure Order, subject to restrictions and conditions.
ISSUES
6The issues to be decided by the Tribunal in this appeal are:
a. Is there reason to believe that having regard to DGMS’ compliance and safety record, it will not operate motor vehicles safely or in accordance with the Act and other applicable highway safety legislation?
b. If there is such reason to believe, is cancellation and seizure of the appellant’s licences the appropriate remedy or should conditions or some other lesser penalty be imposed?
LAW
7The authority of the Registrar and the jurisdiction of the Tribunal are set out in sections 17, 47(1)(f), 47.1 and 50(1) and (2) of the Highway Traffic Act, (the Act).
8Section 47(1) provides that the Registrar may suspend or cancel the plate portion of a permit if it has reason to believe, “having regard to the safety record of the holder or of a person related to the holder, and any other information that the Registrar considers relevant, that the holder will not operate a commercial motor vehicle safely or in accordance with this Act, the regulations and other laws relating to highway safety”. Section 47(2.1) refers to s. 17 for the purpose of determining who are “ related persons”.
9Section 17 of the Act provides that persons are “related individuals” if they are or were partners or have partners in common; if either the applicant or related person controls or controlled or managed the other; or if the persons have had common officers or directors or have been controlled directly or indirectly by the same shareholders.
10Section 50(1) provides the right of appeal to this Tribunal and s. 50(2) allows the Tribunal to “confirm, modify or set aside the decision of the Minister or Registrar”.
EVIDENCE AND ANALYSIS
11Travis Donohue (Mr. Donohue), the Senior Program Administrator in the Carrier Sanctions and Investigations Office of the Transportation Safety Division of the Ministry of Transportation (the “Ministry”), provided evidence for the respondent. Delon, as the owner and operator of DGMS and Annicia Lawrence, (Ms. Lawrence), DGMS’s Safety and Compliance Manager, testified on the appellant’s behalf. Ms. Lawrence also acted as the presenter of the appellant’s case.
Are the Degeneral companies and their principals “related” persons to DGMS as defined by the Act?
12Mr. Donohue gave evidence in support of an ongoing relationship between Juanita, Dillion, DGMS and Delon and the relevance of any relationship to considering the decision of the Registrar.
13The Respondent’s Exhibit Book was made an exhibit in the proceeding and several items in it were referred to by Mr. Donohue in his testimony. Among them were a series of documents which illustrated the history of Degenaral Management’s interactions with the Road User Safety Division of the Ministry, beginning in 2014 and ending in the spring of 2018 when its CVOR was cancelled and Degenaral Trucking’s plates were seized. The Carrier Safety Record Performance Summary, 2016-2017 for Degenaral Management, indicates the involvement of both Delon and Devon as drivers for Degenaral Management from time to time in 2016 and 2017.
14That record also shows that while driving for Degeneral Management, Delon was ticketed once for “disobey a legal sign” and that Degenaral received inspection demerit points for inspection infractions on at least two occasions when he was driving the inspected vehicles.
15The respondent’s material also included a number of DGMS corporate records. Among these is Delon’s application for a CVOR certificate for DGMS. On that application Delon is shown as the “owner”. The date of the application is May 19, 2018. DGMS’s initial CVOR certificate was issued for ten months, from June 18, 2018 to March 31, 2019. From that point on, the DGMS corporate records become confusing.
16An application was made in June 2019 for renewal of the DGMS CVOR certificate. That application is made in Delon’s name and a hand - written asterisk is placed beside his signature line at the bottom of the application. Devon’s signature as a director appears below Delon’s on a second signature line. Elsewhere in the document is a section indicating that Dillion is named as a third “director”.
17Mr. Donohue referred to several DGMS director change forms filed under the Canada Business Corporations Act. These are as follows (order changed to approximate chronological order):
a. A change form signed by Juanita showing Delon as director effective May 18, 2018 and adding herself as a director effective May 22, 2018.
b. A change form signed by Dillion showing himself as the sole director from May 22, 2018.
c. A change form signed by Juanita showing herself and Dillion as directors from May 22, 2018.
d. A change form signed by Juanita showing herself as a director from May 22, 2018 and Dillion as Director from August 1, 2018.
e. A change form signed by Juanita showing herself as a director and removing Dillion as of June 1, 2019.
f. A change form signed by Dillion showing Dillion as the sole director from May 22, 2018 and adding Penelope Smith as a director effective December 1, 2019.
g. A change form, signed by Dillion and dated December 2, 2019, showing Dillion as the director from May 22, 2018 and removing Penelope Smith as a director.
h. A change form signed by Juanita showing herself as a director from May, 22, 2018, adding Devon effective January, 1, 2019 and removing Dillion as of May 2018.
i. A change form signed by Dillion, showing himself and Juanita as directors from May 22, 2018, and adding as new directors, Delon effective May 18, 2018 and Devon January 1, 2019.
j. A change form signed by Juanita listing herself and Dillion as directors effective May 22, 2018 and adding Devon as a director effective January 1, 2019.
k. A change form signed by Juanita, showing her directorship from May 22, 2018 until her removal as of February 2, 2021, leaving Delon as the sole director.
18Mr. Donohue noted that DGMS made its CVOR application only a short time after the Degeneral companies’ certificate and plates were cancelled. He agreed that despite common addresses for Devon and Dillion and the similarity in the names of the three Bovell brothers, (or, I note, the presence of Dillion’s name as a representative on the renewal documentation), the Ministry program that vetts the applications did not pick up the connection either when DGMS’s certificate was approved or when the certificate was renewed. This he assumed was because the computer program used to vett applications notes only exact matches. He stated that if the Ministry had been aware of the connection between the Bovell brothers, DGMS’ application for a certificate or its renewal would have been refused. As it was, DGMS’ connection to the Degeneral companies only came to the Ministry’s attention in 2021 because of DGMS’ previous two year violation rate.
19Delon testified on behalf of DGMS and spoke about the relationship with the principals and the assets of the Degenaral companies. Delon does not deny that there is a relationship between DGMS and Degeneral. He said that by the time Degenaral lost its CVOR status, Dillion and Juanita were in debt and couldn’t continue with what was considered a Bovell family business. He and Devon decided to purchase Degenaral’s assets, (specifically Dillion and Juanita’s trucks), create DGMS, and operate a delivery business.
20Delon maintains that DGMS is no longer “a family business” but now is professionally run. He testified that at the time he applied for the CVOR and until the cancellation and seizure notice, he was not aware of any legal issues with the involvement of Dillion or Juanita in DGMS that would imperil his certificate. He initially relied on each of them for advice and for their connections to what had been Degenaral’s established customers. He denied that either of those individuals ever had a real ownership interest in DGMS but acknowledged that they had owned trucks which DGMS is purchasing.
21Delon did not testify in detail about the many changes to DGMS’ director’s register that were made by Dillion and Juanita. He did say that family dynamics were at play from time to time which resulted in the many changes that had been made. He also explained that Dillion and Juanita’s names were on the corporate record and on the insurance coverage of some of the trucks because the financing for them remained in their names and that he believed that their presence on the records provided some “comfort” to DGMS’ customers. He made specific reference to his aunt, Penelope Smith, who had invested in the business by financing a truck and was placed on the corporate record as a director because of that investment.
22I note that the DGMS renewal certificate filed in June 2019 and included in the respondent’s materials identifies Dillion both as a director (notwithstanding his absence from the corporate record at that time) and as a “representative” who was authorized to conduct transactions on behalf of DGMS. This would substantiate Delon’s testimony that he had no intention to hide an ongoing relationship among the brothers. Delon admitted that his email address was @DeGenaral, which he kept for its familiarity to some of Degenaral’s former customers whose business DGMS had secured. He had not anticipated that it would be a problem. He denied any involvement in the operations of Degeneral, except as a part-time driver.
23In her testimony, Ms. Lawrence confirmed the status of the current management of DGMS, identifying Delon as its sole owner and manager. When asked about her familiarity with Dillion and Juanita, she stated that she does not know and has not met either of them since she joined the company in February 2021.
24No questions were asked, or evidence given about a financial partnership among the Bovell brothers or about common shareholdings in either the Degenaral companies or DGMS. It is clear however that there is a family relationship between the brothers, a continuing vendor and purchaser relationship as DGMS buys the trucks owned by Dillion, Juanita, and Penelope Smith (the purchases said to be completed early in 2022), a mentoring relationship (at least for some period of time) with the former operators of Degenaral, an employment relationship, where each of the brothers has driven for both of the companies, and an almost inexplicable directorship profile for DGMS that Delon describes as a form of security for balances outstanding on the trucks that DGMS is purchasing.
25Given that evidence, I do not conclude that there was intent by Delon to misrepresent the ownership of DGMS at the time of the application for the CVOR, nor to hide that Dillion and Juanita remained engaged in some way for a period of time as was intimated if not alleged by the respondent. My view is further substantiated by the notes of the “show cause” meeting held with DGMS on February 11, 2021. These indicate that Delon was asked whether Juanita would be attending the meeting because of her presence on the corporate record. Delon then described her as having been a “part owner”, and upon request, he contacted Juanita and she joined the meeting. Both Delon and Juanita confirmed that she was removed from the corporate record in December 2020.
26I find the DGMS corporate records unreliable as records of shared ownership or an indication of Dillion or Juanita’s management responsibility in DGMS. I accept Delon’s explanation that Dillion and Juanita owned trucks that were being paid off by DGMS and therefore each had an “interest” in the viability of DGMS’ business. That interest taken alone does not appear to have risen to the level of a shared/share ownership, despite Delon’s comments at the show cause. What is relevant however is whether because of the relationships that did exist, there is a connection between Degenaral’s safety rating and that of DGMS.
27Mr. Donohue testified and the materials provided as exhibits indicate that Dillion, Devon and Delon and at least one other individual, drove for both Degenaral and DGMS and while driving for DGMS, each of those drivers incurred demerit points that contributed somewhat to DGMS’ violation rate. While that is concerning, I cannot conclude that in and of itself it should lead to the cancellation of DGMS’s CVOR and seizure of its plates.
Is there reason to believe that having regard to DGMS’ compliance and safety record, it will not operate motor vehicles safely or in accordance with the Act and other applicable highway safety legislation?
28In his testimony, Mr. Donohue gave a detailed description of the monitoring system in place to oversee the safety and compliance record of every carrier which holds a CVOR certificate. Simply put, the system evaluates a carrier’s record of safety inspections, convictions and collisions, assigning demerit points which accumulate to determine a carrier’s “violation rate”, expressed as a percentage of a “points threshold” based on the kilometers its vehicles travel in a certain period. A carrier’s violation rate is measured against the violation rates of all other carriers in the province.
29Mr. Donohue explained that the violation rate serves as a “triggering mechanism” to allow the Registrar to intervene in cases where there is concern. In his words, the goal of such intervention is “to gain compliance short of a sanction”, (emphasis added). He noted that differing levels of compliance may call for different sanctions including performance conditions, fleet limitations and suspensions.
30In September 2019, on the renewal of its first period of registration, DGMS had been given a “conditional” safety rating based on its violation rate. Its Carrier Safety Record was reviewed again as of January 19, 2021 for the two year and seven month period running from September 2019 through December 2020. During this period it appeared to have had a violation rating of 82.86% which was considered unacceptable. Of most concern was the violation rate for collisions of 71.93% and convictions at 121.42% which together made up 80% of the calculation. Inspections at 27.61% were better but were weighted at only 20% of the total.
31The Commercial Vehicle Operator Record provided as an exhibit, illustrates DGMS’ performance details for the period from December 2018 to December 14, 2020. It shows that over that period DGMS had four collisions, with no serious personal injuries. There were also 12 convictions, seven of which were against DGMS drivers personally for various infractions. Some of these arose from the collisions. Others included speeding, not observing road signs/lights and licence infractions. The remainder were against DGMS for vehicle issues such as loads over the vehicle limit, driving with faulty lights, failing to display the CVOR number and failing to produce logs on request. Mr. Donohue noted that among this latter category of vehicle issues were incidents of convictions of Dillion and Devon and the one other individual who had also driven for Degeneral. Regardless of the nature of these issues, they generated points and contributed to putting DGMS at a safety level far below the norm.
32Mr. Donohue testified that according to the statistics complied by his division, of the 53,501 CVOR holders in the system, only 12 were in the 85.1-100% violation range and only 31 were in the 70.1-85% violation range. Over 90% were in the 0-15% range.
33DGMS’ violation rate led to a deeper look into DGMS. Various searches then showed that DGMS owed $307.81 in unpaid fines, (now paid), that Juanita had been on the record as the “only director” for the times noted above, and that Delon and Devon had driven for Degeneral. These issues taken together, led to the “Notice of Cancellation and Seizure” dated January 21, 2021.
34As is required, a meeting was scheduled to give DGMS the opportunity to “show cause” why the cancellation and seizure should not be issued. The meeting took place on February 11, 2021 and notes representing a record of that meeting were prepared by Mr. Donohue and included in the Respondent’s Exhibit Book. The Ministry was represented by the Deputy Registrar, the Program Standards Manager and Mr. Donohue.
35Other than the presence of Juanita referred to above, attending on behalf of DGMS were Delon and his Operations Supervisor, Saira Yasmeen. Ms. Yasmeen did not testify at the hearing, but according to Mr. Donohue’s show cause notes, she had been working in the industry with another company since 2014, including assisting the operations manager of that company. She joined DGMS in December 2020.
36According to those notes, at the time of the show cause, DGMS was operating with eight vehicles. While the Program Standards Manager asked most of the questions, the Deputy Registrar engaged to express his concern that Delon did not have a strong understanding of how to run the business safely. He made the suggestion that Delon gain the knowledge needed to run the business responsibly by taking the courses outlined in the action plan that had been filed by DGMS prior to the meeting.
37In his testimony at this hearing, Delon addressed the issue of his experience and his running of the company. He explained that he is the eldest of the three Bovell brothers.1 Delon said that he has a high school education and has taken some business courses at Centennial College. He has worked at various companies other than Degenaral and DGMS. He emphasized that contrary to when DGMS began operating, it is now being “professionally run with the assistance of his management team”. He admitted that his efforts to run DGMS without outside help had led to “a cloud over its head” and that when he first received a warning from the Registrar to take immediate action, he had not responded. When DGMS was downgraded to “conditional” status, he realized the importance of getting help and he took the action that he had earlier failed to do. He pleaded for the opportunity to continue DGMS’ CVOR registration until the next renewal period and to have the opportunity to prove himself.
38As noted, Ms. Yasmeen joined DGMS in December 2020. DGMS’ second witness Ms. Lawrence, joined DGMS’ management team as its Safety and Compliance Manager in February 2021. Ms. Lawrence is in the third year of a four year course in Occupational Health and Safety at Ryerson University which she is completing on a part-time basis. Prior to working for DGMS, she had several years of work experience as an accounting clerk in the financial industry. Despite the tough questioning of respondent’s counsel, she gave her testimony clearly and with conviction and I found her to be a credible witness. I also believe she has been and is likely to remain being a substantial help to DGMS should it continue. She has created DGMS’ safety manual and is facilitating its implementation.
39A copy of the appellant’s “disclosure” document and the DGMS Safety Manual were made exhibits and referred to in Ms. Lawrence’s testimony. In addition to requirements that drivers adhere to numerous safety measures, the manual contains DGMS’ expectations and rules around employees’ attitude, its policy on use of controlled substances and alcohol, its standards of honesty, and DGMS’ harassment policy. It also requires each employee to sign a commitment to abide by the terms of employment specified in the document, noting that failing to obey the policy will result in discipline, specifically suspension or termination.
40Ms. Lawrence confirmed that since her arrival at DGMS and the creation of the safety policy, the employment of several drivers has been terminated because of their failure to respect the changes that were being made. Except for Devon and Delon, none of the former Degenaral drivers are currently employed by DGMS. DGMS now holds regular weekly meetings with the drivers, both individually and as a group, has mandated the requirement that drivers log all inspections correctly and document any required repairs, and that immediate attention be given to any such repairs. An e-log system is being implemented and until it is fully in place, each driver is required to daily photograph and submit his log- books for review.
41She was cross examined about the bi-weekly “incentive” of a small bonus that has been created to reward drivers who maintain a clean record over that period. She admitted that some who have been bonused were later fired for not adhering to the safety policy. As she put it, the bonus system is intended as a motivator and “it helps some, but not all”.
42Ms. Lawrence stated that DGMS currently has 11 drivers, the majority of whom have successfully completed a driver’s safety course. DGMS has made the course mandatory for each new driver upon his passing a three-month probationary period. Among the materials filed by the appellant were certificates confirming that several drivers, including both Delon and Devon, had successfully completed a “Defensive Driving – Large Vehicles” course. Ms. Lawrence also said that DGMS confirms the three-year driving record of all new drivers and now does a driving record search of its drivers every six months.
43Ms. Lawrence confirmed that DGMS’s last safety violation rating has been updated to reflect corrections to errors made in DGMS’ reported mileage and is now at 70.27%. This was confirmed by a copy of a Performance Summary from the Transportation Safety Division filed with the appellant’s disclosures.
Is cancellation and seizure the appropriate remedy or should conditions or a lesser penalty be imposed?
44In argument, counsel for the Registrar urged me to conclude that because of the connections between Degeneral and DGMS and their unsatisfactory safety records, DGMS’ appeal should fail. He stated that the changes made in DGMS as described by Delon and Ms. Lawrence, are insufficient to counter DGMS’ poor safety record. He submitted that to determine otherwise, I would have to find that significant steps have been taken to show that past problems wouldn’t happen in the future. He criticized the incentive program, suggesting that a two-week period of good results was too short, and that waiting until the end of the probation period to enrol drivers in a safety course was too long. He referred me to the statutory standard of s. 47 of the Act which provides for a cancellation where the Registrar has “reason to believe” that the holder will not operate a commercial motor vehicle safely. He urged me to accept that the case had been made for the cancellation and seizure order to proceed.
45I find on the evidence that DGMS has made substantial improvements to support road safety. It has implemented a safety plan, terminated the employment of poor drivers, chosen its new drivers more carefully, provided them with further training, implemented an e-log system and attended to vehicle repairs in a timely way. Its violation rate has improved, moving it into a better category. DGMS now has a management structure in place and overall, as was intended, the Registrar’s intervention has helped DGMS become more compliant and as a result, a sanction short of cancellation of DGMS’ CVOR certificate and seizure of its plates is warranted.
CONCLUSION
46Section 50(2) of the Act provides for this Tribunal to confirm, modify, or set aside a decision of the Minister or the Registrar. The onus is on the Registrar to show that its decision should be confirmed and in this case, given the steps DGMS has taken to address safety issued, I am persuaded that it should have the “second chance” that it has asked for. No cases were provided or cited by either party that would assist me in considering a range of possible sanctions or conditions short of cancellation and seizure. However, several cases previously decided by this Tribunal confirm that CVOR holders have had conditions and restrictions placed on them in circumstances where they had similar or worse safety records.
47Having concluded that cancellation and seizure is not the appropriate sanction in this case and that in my view, the public interest in safe highways can be adequately protected by imposing conditions upon DGMS’ registration, I am allowing DGMS to retain its CVOR subject to the conditions and restrictions set out below.
ORDER
48Pursuant to its authority as set out in section 50(2) of the Act, this Tribunal orders the Registrar to set aside the Cancellation and Seizure Order dated March 31, 2021 and that DGMS Management Service Inc. may retain its CVOR Certificate subject to the following conditions and restrictions:
From the date of the release of this Order and for the remainder of this CVOR registration period: DGMS’s fleet shall be limited to eight vehicles.
On or before March 30, 2022, Delon Bovell shall satisfactorily complete the CVOR Test mandated by the Ministry of Transportation and provide evidence of the completion of the test to the Senior Program Administrator, Carrier and Sanctions Division of the Ministry of Transportation. The parties are encouraged to work together so that Delon may take the CVOR written test as quickly as possible.
Released: November 24, 2021
LICENCE APPEAL TRIBUNAL
Harriet Lewis, Member