Tribunal File Number: 12332/CVOR
Appeal under Section 50(1) of the Highway Traffic Act, R.S.O. 1990, c H.8 from a Cancellation and Seizure Order of the Deputy Registrar of Motor Vehicles under sections 47 and 47.1 of that Act
Between:
10318639 Canada Inc.,
Haniya Enterprises Inc. o/a J E Express,
2343788 Ontario LTD. o/a Vanak Transportation,
2143983 Alberta LTD.
Appellants
-and-
Registrar of Motor Vehicles
Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR:
Stephen Scharbach, Member
APPEARANCES:
2343788 Ontario Ltd:
Haniya Enterprises Inc.
2143983 Alberta Ltd.
10318639 Canada Inc.
Teresa Baykara, Paralegal
Induraj Nagularajah, Director
William Gilmour, Counsel
No-one appearing
For the Respondent
Patrick Moore, Counsel
Date of Hearing:
October 5, 6, 7 ,8, 9, November 6, 9, 25, December 10, 12, 14, 2020
A. OVERVIEW
1The four appellants are trucking companies that hold Commercial Vehicle Operator Registration (“CVOR”) certificates which allow them to operate commercial vehicles on public roads.
2They appeal a Cancellation and Seizure Order (“Order”) issued by the Registrar of Motor Vehicles (“Registrar”) on September 12, 2019 under s. 47 of the Highway Traffic Act (“Act”).
3That Order cancelled the CVOR certificates and ordered the seizure of the plate portions of permits and numbered plates for all commercial vehicles and trailers issued to 2343788 Ontario Ltd (“Vanak”) and four companies alleged to be affiliates of Vanak:
Haniya Enterprises Inc. (“Haniya”)
10318639 Canada Inc. (“103 Canada”)
2143983 Alberta Ltd. (“Midstar”)
10469904 Canada Inc.
4The Order was based on the Registrar’s belief that, having regard to the safety record of Vanak and its allegedly related companies, the appellants will not operate commercial vehicles safely or in accordance with the Act, the regulations, and other laws relating to highway safety.
5Of the five companies affected by the Order, four filed a Notice of Appeal1. The four appellants are Haniya, Vanak, Midstar and 103 Canada. Although 103 Canada filed a notice of appeal, it did not attend or participate in the hearing.
6The remaining three appellants – Vanak, Midstar and Haniya – essentially take the position that their current road safety record does not justify the cancellation of their CVOR certificates, and they are unrelated companies.
B. THE ISSUE
7Having regard to the safety record of any of the appellants or of persons related to the appellants, is there reason to believe that the appellants will not operate commercial vehicles safely or in accordance with the Act, the regulations, and any other laws relating to highway safety?
C. DECISION
8I find that there is reason to believe that the appellants will not operate commercial vehicles safely or in accordance with laws relating to highway safety and, for the reasons set out below, I confirm the Registrar’s Cancellation and Seizure Order dated September 12, 2019.
D. THE LAW
9Section 47(1)(f) of Act provides that the Registrar may, by order, cancel a CVOR certificate and the plate portion of a permit on the grounds of:
(f) the Registrar having 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 vehicle safely or in accordance with this Act, the regulations, and any other laws relating to highway safety. (emphasis added)
10The Act provides that any person aggrieved by an order of the Registrar under s. 47 may appeal the order to this Tribunal and, on an appeal, the Tribunal may confirm, modify or set aside the order of the Registrar.2
11In this case, the Registrar takes the position that the poor road safety record of Vanak and Midstar alone justifies cancellation of their CVOR certificates and plates. However, the Registrar also takes the position that the certificates of all of the appellants should be cancelled because of the poor road safety record of “related” companies.
12The Act provides that one entity is related to another if,
the entities are related individuals;
either entity is a partner of the other or was a partner of the other or they have or have had partners in common;
either entity directly or indirectly, controls or controlled or manages or managed the other; or
the entities have or have had common officers or directors, or they are or have been controlled, directly or indirectly, by the same shareholders.3
E. ANALYSIS and FINDINGS
(a) Background
13The record of Mr. Induraj Nagularajah as a commercial trucking operator features prominently in the Registrar’s case.
14According to the Registrar, Mr. Nagularajah has operated in the trucking industry in Ontario since at least 2007 under successive corporate entities. The road safety record of the companies he operated or managed have been poor and their CVOR certificates have been sanctioned or cancelled.
15The Registrar alleges that as one company was sanctioned or lost its CVOR certificate, Mr. Nagularajah moved his business to the next and has operated consecutively through the following companies:
2092889 Ontario Inc. (“Joyce Express”)
Haniya
2386048 Ontario Ltd o/s Black Stallion Trucking (“BST”)
Vanak
Midstar
16Mr. Nagularajah does not appear as a recorded officer or director of any of the above corporations except the first one - Joyce Express. However, according to the Registrar, he managed or directed the trucking activity of all of them as a de facto officer, and they all have very poor road safety records.
17As mentioned, with respect to two of the appellants - Vanak and Midstar - the Registrar argues that their own past road safety records provide sufficient grounds for cancellation of their CVOR certificates.
18However, with respect to all four appellants (Vanak, Midstar, Haniya and 103 Canada), the Registrar also argues that the road safety record of companies allegedly related to the appellants also affords grounds for belief that they will not operate safely and in accordance with the law. According to the Registrar, all four appellants, as well as two previous companies whose CVOR certificates were cancelled (Joyce Express and BST), were managed and directed by Mr. Nagularajah and they are therefore all related entities for the purposes of s. 47 of the Act. As related entities, the road safety records of all of them may be taken into account in determining whether the appellants should be allowed to retain their CVOR certificates.
19I conclude, for the reasons set out below, that Joyce Express, BST, and the four appellants are related because Mr. Nagularajah managed or directed the trucking activity of each corporation. Thus, the safety records of Joyce Express, BST and the appellants themselves, are relevant to determining whether there is reason to believe that the appellants will not operate commercial vehicles safely or in accordance with the laws relating to highway safety.
(b) Mr. Nagularajah’s Previous Involvement with Joyce Express, Haniya and BST
(i) 2092889 Ontario Inc. o/a Joyce Express – LAT Decision of November 1, 2011
20Joyce Express was the first truck transportation company managed by Mr. Nagularajah that had its CVOR certificate cancelled due to its poor road safety record.
21The company was granted a CVOR certificate in 2007, and it was cancelled by order of this Tribunal on November 1, 20114. According to the Tribunal’s decision, Mr. Nagularajah was recorded as an officer (secretary), although by the time of the Tribunal hearing he was acting as its president.
22The Tribunal considered the company’s poor road safety record, which included the following:
February 2007 - CVOR certificate issued
September 2008 - warning letter issued
November 2008 - conditional rating
November 2008 to January 2010 - several accidents, charges and convictions, caused by driver fatigue, driving in excess of allowable hours, lack of attention and excessive speed
March 2010 - 1st notice of cancellation and seizure
Show cause meeting - cancellation order set aside and performance conditions imposed for 12 months
Seven collisions recorded
April 2011 – 2nd notice of cancellation and seizure
23The Tribunal noted that Joyce Express’ road safety record was exceptionally poor:
This carrier has not had a violation rate below the 100% threshold since coming to the attention of the MTO. By far, the majority (96%) of carriers in Ontario operate well below the violation rates that require any intervention. The Applicant is in the .02% that did not respond and heed previous interventions…Based on the evidence, there is no basis upon which the Tribunal can conclude that either the Applicant or the consultant could turn this operation around to become compliant.5
24The Tribunal concluded that based on the company’s poor road safety record under Mr. Nagularajah’s management, there was reason to believe that Joyce Express would not operate safely or in accordance with the law and ordered the cancellation of its CVOR certificate.
(ii) Haniya Enterprises Inc. - LAT Decision of November 24, 2014.
25After Joyce Express’ CVOR certificate was cancelled, Mr. Nagularajah began operating his trucking business through Haniya Enterprises Inc., one of the appellants in the present proceeding. In December 2013, the Registrar issued an order cancelling Haniya’s CVOR certificate and Haniya appealed that order to this Tribunal.
26The Tribunal found that shortly after the Tribunal’s decision to cancel the CVOR certificate of Joyce Express, Mr. Nagularajah started operating his trucking business through Haniya under the operating name “JE Express”. Mr. Nagularajah did not appear on corporate records as an officer or director. The sole corporate officer was Indranidevi Nagularajah, Mr. Nagularajah’s mother.6
27The Tribunal found however that Mr. Nagularajah ran the operations of Haniya and performed the functions of a general manager and was thus functionally an officer of Haniya. Because Haniya and Joyce Express were both managed by Mr. Nagularajah, the Tribunal considered them “related” companies and Joyce Express’ poor safety record could be taken into account in determining whether Haniya was suitable to hold a CVOR certificate. Ultimately, the Tribunal concluded that Haniya should retain its CVOR certificate, but its fleet size was limited to one truck.
28Notably, the Tribunal concluded that Mr. Nagularajah moved his trucking activity to Haniya to avoid the consequences of his poor safety record in managing Joyce Express, something the Registrar alleges Mr. Nagularajah has continued to do up to the present time. The Tribunal stated:
According to the Registrar, Mr. Nagularajah created Haniya specifically to avoid the consequences of his involvement with Joyce Express. The evidence shows that he admitted as much at the show cause hearing. The false disclosure of the names of the president on and the address of the head office of the corporation on the CVOR application establishes a deliberate attempt to mislead. Before this Tribunal it is clear that Mr. Nagularajah was aware of the ramifications of his involvement in Joyce Express and tailored his evidence in an attempt to distance himself from the very obvious fact that he was the controlling mind of Joyce Express and is the controlling mind of Haniya.7
29This case is significant because the Tribunal concluded that Mr. Nagularajah continued to operate his trucking business under a different corporate name to distance himself from the poor road safety record of Joyce Express. In fact, Mr. Nagularajah attempted the same thing a second time under the name Black Stallion Trucking.
(iii) 2386048 Ontario Inc. (c.o.b. Black Stallion Trucking) - LAT Decision April 1, 2016[^8]
30In December 2014, the Registrar issued an order cancelling BST’s CVOR certificate, and BST appealed that order to this Tribunal.
31The Registrar took the position that BST’s CVOR certificate should be cancelled having regard to its own road safety record as well as the safety record of a “related person” – Joyce Express. According to the Registrar, BST and Joyce Express were related because they shared a manager or director – Mr. Nagularajah.
32BST’s recorded president was James Alexander (also the company’s mechanic). Although Mr. Nagularajah did not appear on BST’s corporate records as an officer or director, the Registrar took the position that Mr. Nagularajah was in fact its directing mind.
33In a decision released on April 1, 2016, the Tribunal ordered the Registrar to cancel BST’s CVOR certificate. With respect to BST’s safety record, the Tribunal described it as “abysmal”9 and concluded that it alone provided clear reason for the Registrar to believe that BST will not operate safely or in accordance with laws relating to highway safety.
34With respect to whether Joyce Express and BST were related through the common management of Mr. Nagularajah, the Tribunal found that Mr. Nagularajah in fact managed BST’s operation and, given his track record at Joyce Express, that was an additional ground for cancelling BST’s CVOR certificate. The Tribunal noted that:
The evidence indicates that Induraj Nagularajah was managing the operations of [Black Stallion] at least until it was sold to Mr. Beiki. Therefore, the Tribunal finds that Mr. Nagularajah to be a “related person” in accordance with s. 17(4) of the Act. The Tribunal has already concluded that [Black Stallion]’s safety record provided the Registrar with reason to believe that it will not operate safety. However, based on Mr. Nagularajah’s association with Joyce Express, the CVOR certificate of which was cancelled by the Tribunal, the Tribunal also has reason to believe that [Black Stallion] will not operate safely based on the safety record of a related person.10
35This case is also significant for two reasons. Firstly, it demonstrates that for a second time, Mr. Nagularajah operated his trucking business under a different corporate name and CVOR certificate to avoid the consequences of his earlier poor road safety management record.
36Secondly, BST was the third trucking company (along with Joyce Express and Haniya) managed by Mr. Nagularajah to have its CVOR certificate cancelled or sanctioned due to its poor road safety record.
(c) Common Management of the Appellants
37The Registrar alleges that around the time that BST’s CVOR certificate was cancelled, Mr. Nagularajah started operating his trucking business under the corporate names of the appellants - Vanak, Haniya, 103 Canada, and finally, Midstar.
38The Registrar takes the view that all four appellants are “related” for the purposes of the Act because all of them are (or were at the relevant times) managed by Mr. Nagularajah, although he does not appear in their corporate records as an officer or director.
39I conclude, based on the evidence summarised below, that all four appellants are, or were, managed and controlled by Mr. Nagularajah as part of his trucking business and are therefore “related companies”. Thus, the safety records of Joyce Express, BST, Vanak and Midstar are relevant in determining whether there is reason to believe that the appellants will not operate safely.
40Most of the evidence relating to the relationship between the appellants and Mr. Nagularajah was provided through the Registrar’s witnesses, including a former employee of Mr. Nagularajah. Although Mr. Nagularajah participated in part of the hearing as the representative of Haniya, he withdrew his participation on November 25, 2020 and he provided no evidence contradicting the Registrar’s witnesses.
41The clearest evidence of the role that Mr. Nagularajah played in the trucking operations of the appellants was provided by Anusan Garunamoorthy, a former employee. Mr. Garunamoorthy testified that he worked as a truck driver for Mr. Nagularajah’s trucking operation for about six months in 2018, six months in 2019, and then occasionally in 2019 and 2020. His evidence was essentially uncontradicted on the following points:
Mr. Garunamoorthy was hired by Mr. Nagularajah in 2018 and eventually was terminated by Mr. Nagularajah in 2020.
Mr. Nagularajah directly told Mr. Garunamoorthy that he was the owner and, in practice, Mr. Nagularajah was in charge of the trucking operation. Staff did not regard him as a broker or a salesperson; he was known as the owner.
Mr. Nagularajah was the final decision maker, he was usually present in the office, he authorised cheques, hired and fired staff, and occasionally dispatched loads.
When Mr. Garunamoorthy was originally hired, he worked for Vanak but later the company transitioned to operating as 103 Canada and Midstar. The names of the companies that Mr. Garunamoorthy worked for changed but the staff remained mostly the same, and Mr. Nagularajah remained in charge.
When Mr. Garunamoorthy picked up a load, the dispatcher would tell him which company name he would be operating under - Vanak, Midstar, or 103 Canada. On occasion, he then would be instructed to declare the operator as Vanak, but he would be driving a Midstar truck using a 103 Canada logbook. Sometimes he would operate under Midstar but be paid by 103 Canada. From Mr. Garunamoorthy’s perspective, they were all part of the same trucking operation, and Mr. Nagularajah was its directing mind.
42Mr. Garunamoorthy’s evidence was confirmed in some respects by the evidence of MTO audit and inspection staff who testified that:
A facility audit conducted on Vanak in May 2019 revealed that Vanak was no longer operating from its registered MTO location. It was operating from a location on Bass Pro Mills Drive in Vaughan where 103 Canada and Midstar also appeared to be operating.
MTO staff attended at that location and noted that Mr. Nagularajah was present. The office had a common receptionist, and logbooks and paperwork from all three companies were being handled by that receptionist.
MTO staff attended at a yard being used by Vanak and noted vehicles marked as being operated by 103 Canada, Midstar and Haniya. One driver pulling a 103 Canada trailer told MTO inspection staff that he worked for Vanak, specifically for “Raj” [Mr. Nagularajah].
43I also note that:
The Alberta transportation regulatory authority commenced an investigation into the safety of Midstar after it learned of a collision in BC involving a Midstar vehicle and impaired driving. The Alberta investigator testified that he was surprised to learn that the Alberta corporation had no real presence at its Alberta registered office location and instead was operated out of the Bass Pro Mills location in Vaughan, Ontario.
An analysis prepared by the MTO shows that of the 18 drivers identified as being employed by Midstar in 2019, 17 of them were previously employed by Vanak, mainly in 2017 and 2018.
103 Canada has its registered head office in Quebec; however all the business records relating to its trucking operation were kept at the Bass Pro Mills offices where the records of Haniya and Vanak were also kept.
Mr. Nagularajah appeared on behalf of Vanak and held himself out as Vanak’s owner in a case before the Ontario Labour Relations Board involving a claim by a former employee for amounts owing to him by Vanak. In its September 2019 decision, the Board stated:
Vanak is a trucking company which operates a large fleet of trucks and trailers. It has a truck yard … in Vaughan, Ontario. Mr. Nagularajah is the owner of Vanak and has been the controller for the past 5 years (emphasis added).11
44The only evidence called by any of the appellants relating directly to Mr. Nagularajah’s role in the appellants was provided by Mr. Mohammad Rasaei, Vanak’s sole officer and director.
45According to Mr. Rasaei, he is the owner of Vanak. He started the company in 2012 with two trucks. He later hired Jasvir Padda who he says was instrumental in increasing his fleet size, which at one point in 2018 included 120 trucks. He testified that Mr. Padda was really running the company. Vanak’s trucks were leased from Haniya (which as set out below is a company managed by Mr. Nagularajah); Vanak rented office space from Haniya; and much of Vanak’s business was provided by Mr. Nagularajah. However, according to Mr. Rasaei, he owned Vanak, not Mr. Nagularajah.
46According to Mr. Garunamoorthy, Mr. Rasaei worked as a driver at Vanak and, as far as Mr. Garunamoorthy was aware, Mr. Rasaei had no management responsibility.
47That seems to be consistent with much of Mr. Rasaei’s evidence. He admitted that he was not really running the business and he was not aware of the details of its operation. For example, he was unaware of Vanak’s fleet size during the time it was active, and he seemed to be completely unaware of the Ontario Labour Relations Board case in which Mr. Nagularajah appeared and gave testimony as Vanak’s owner.
48In summary, I find that the weight of the evidence indicates that Vanak was one corporate vehicle which, along with Haniya, Midstar and 103 Canada, was managed in common by Mr. Nagularajah as components of his trucking business.
49I turn now to a consideration of each of the appellants individually.
(d) The Appellants
(i) Haniya Enterprises Inc.
50The Registrar argues that Haniya’s CVOR certificate should be cancelled, not because of its own road safety record, but because of the road safety record of its related companies.
51Haniya was initially represented at this hearing by Mr. Nagularajah. However, as mentioned, he withdrew from the hearing on November 25, 2020 and provided no evidence. He also announced then that Haniya was in bankruptcy. Counsel for the Registrar informed Haniya’s trustee in bankruptcy about the Tribunal hearing and the next scheduled hearing date, but the trustee did not respond or participate in the hearing.
52I conclude that up until the bankruptcy, Haniya was managed by Mr. Nagularajah who was its directing mind. Taking into account the road safety record of companies related to Haniya through Mr. Nagularajah’s common control and management, I conclude that there is reason to believe that Haniya will not operate safely and in accordance with laws relating to highway safety, and that its CVOR certificate should be cancelled.
53Haniya is the same company that the Tribunal found in 2014 was created by Mr. Nagularajah to avoid the consequences of his involvement with Joyce Express. At that time, Haniya’s officer and director was Mr. Nagularajah’s mother, and according to a corporate profile search conduced in October 2019, she was still Haniya’s officer and director at that point.
54However, Mr. Nagularajah acknowledged to MTO officials in meetings that led up to the Order that he was Haniya’s owner. At a show cause meeting with MTO officials in September 2017, Mr. Nagularajah attended and made submissions as Haniya’s president. It was pointed out then that according to the corporate records, Mr. Nagularajah was not an officer/director. Haniya’s representative indicated that the records would be corrected, and Mr. Nagularajah would be appointed as an officer.
55There is no evidence to indicate that change occurred. However, at a second show cause meeting in August 2019 just before the Order now under appeal was issued, Mr. Nagularajah again attended in the capacity of president of Haniya and provided an overview of Haniya’s involvement in his trucking business.
56In summary, I conclude that Mr. Nagularajah was Haniya’s de facto manager and directing mind, and that Joyce Express, BST, Vanak and Midstar are all related to Haniya through Mr. Nagularajah’s common management.
57Taking into account the poor road safety records of those entities, I conclude that there is reason to believe that Haniya will not operate safely or in accordance with laws relating to road safety, and its CVOR certificate should be cancelled.
(ii) Vanak Transportation
58The Registrar alleges that after the CVOR certificates of Joyce Express, BST and Haniya were cancelled or sanctioned, Mr. Nagularajah started operating his trucking operation under the Vanak name and CVOR certificate.
59Mr. Nagularajah does not appear in Vanak’s corporate records as an officer or director. Vanak’s only recorded company officer and director is Mr. Rasaei.
60However, for the reasons described above, I conclude that Vanak was in fact being operated by Mr. Nagularajah as part of his trucking operation. Considering both Vanak’s own road safety record and the safety record of companies related to it through Mr. Nagularajah’s common management, there are grounds to support the cancellation of Vanak’s CVOR certificate.
61With respect to Vanak’s road safety record, the following summary indicates that it alone provides reasons to believe that Vanak will not operate safely.
62In September 2017, the Registrar issued a notice of cancellation of Vanek’s CVOR certificate based on Vanek’s road safety record which included:
an unacceptable violation rate with respect to inspections, convictions and collisions over the previous two-year period including an overall violation rate exceeding 100% of the threshold;
a failed facility audit in 2016 that identified a lack of compliance with requirements relating to highway safety;
multiple false logbook entries;
a wheel-off incident in 2016;
26 collisions; and
21 pending convictions before the court, as well as unpaid fines.
63A show-cause meeting took place to give Vanak an opportunity to provide information as to whether its CVOR certificate should be cancelled. Vanak committed to monitoring hours of service, driver training, and operational policies in an effort to improve overall safety performance. The Registrar set aside the notice of cancellation and instead imposed “performance conditions” which provided that Vanak’s CVOR certificate would be subject to cancellation and seizure if:
the overall safety violation rate exceeded 50% of threshold;
the company failed to conduct monitoring for drivers to determine compliance with the hours of service regulation;
the company failed to provide the MTO with quarterly reports of hours of service violations; and
the company failed to inform the MTO of changes to its commercial vehicle operation including change to fleet size, change of operational address, identity of corporate officers and significant change in annual kilometric travel.
64A performance condition review conducted in May 2019 revealed that Vanak failed to meet any of the performance conditions:
the overall safety violation rate was 94.42 %;
a check of records showed multiple drivers where no monitoring of hours of service was completed;
one quarterly report was provided since the performance conditions were imposed; and
Vanak failed to inform the MTO of multiple changes in its fleet size, kilometric travel and operational address.
65The review also indicated that Vanak failed a May 2019 facility audit and, during the period the conditions were in place, 118 convictions were registered against the company and its drivers including 20 speeding convictions, two for speed in excess of 120 km/hr, and 18 hours of service violations.
66In July 2019, the Registrar issued a Notice of Cancellation and Seizure, and a show-cause meeting took place on August 7, 2019. Mr. Rasaei attended on behalf of Vanak. According to the notes of that meeting, Mr. Rasaei provided no explanation for the company’s poor road safety record or any plan for improvement. On September 12, 2019, the Registrar issued the cancellation and seizure Order now under appeal.
67Mr. Rasaei testified at this hearing but did not seriously dispute Vanak’s safety record. He testified that Vanak is now down to two trucks and stopped operating in 2019. However, at this point, he would like to retain a CVOR certificate to allow him to operate his trucks as a truck driver training school, something he did earlier while living in BC.
68I note that Mr. Rasaei was the sole officer and director of Vanak while it accrued a very poor road safety record. Mr. Rasaei does not personally accept responsibility for that and claims that he left operational matters to Jasvir Padda. Ultimately however, Mr. Rasaei was Vanak’s sole officer and director and he was in a position to ensure that Vanak operated appropriately and in accordance with law. He clearly failed.
69Given Vanek’s poor road safety record and Mr. Rasaei’s failure to ensure that Vanek operated safely, I do not consider it appropriate to allow his company to retain a CVOR certificate for the purpose of training other drivers.
(iii) 103 Canada Inc.
70The Registrar takes the position that 103 Canada’s CVOR certificate should be cancelled, taking into consideration the poor safety record of the companies that are related to it through Mr. Nagularajah’s common management.
71103 Canada is a federal business corporation, incorporated in July 2017. Its sole officer and director is Harvey Dennis, who filed a notice of appeal in this proceeding on behalf of the company. However, I was told at the hearing that Mr. Dennis died in April 2020. No-one appeared on the company’s behalf, and it called no evidence.
72According to Mr. Garunamoorthy, Mr. Dennis was a licenced in-house paralegal providing service to Mr. Nagularajah’s trucking operation and its drivers. As far as Mr. Garunamoorthy was aware, Mr. Dennis played no role in the management of 103 Canada or in directing its trucking operations. Mr. Nagularajah was the directing mind and final decision maker for all matters relating to the trucking operation of the four appellants, including 103 Canada.
73I conclude that 103 Canada’s CVOR certificate should be cancelled. As outlined above, the evidence proves on a balance of probabilities that 103 Canada, along with Vanak, Haniya and Midstar were managed by Mr. Nagularajah to conduct his trucking business.
74Considering the road safety record of the other companies managed by Mr. Nagularajah (Joyce Express, BST, Vanak, and Midstar), there is reason to believe that 103 Canada will not operate safely or in accordance with laws relating to highway safety, and I confirm the Registrar’s Order to cancel 103 Canada’s CVOR certificate.
(iv) Midstar
75The Registrar takes the position that Midstar’s CVOR certificate should be cancelled taking into consideration both its own poor road safety record and the poor safety record of companies related through Mr. Nagularajah’s common management.
76Midstar was represented by counsel at the hearing and Alina Cucos, Midstar’s current sole officer and director testified.
77Ms. Cucos purchased Midstar as of May 1, 2020 and says she took over management of its operation in June 2020. Up until the purchase, Midstar’s sole officer, director and shareholder was Joyce Jayapalan who, according to the evidence, is Mr. Nagularajah’s niece.
78Midstar’s position is that firstly, although there were concerns about Midstar’s past road safety record, the company is now being operated under Ms. Cucos’ new management. Since taking over, she has taken concrete measures that have, and will continue to improve the company’s safety performance.
79Secondly, Mr. Nagularajah is not currently involved with Midstar. Although Ms. Cucos and Mr. Nagularajah are in a common law relationship and have a child together, he is not an owner, director, or shareholder of the company and has no financial interest in it.
80According to Ms. Cucos, Mr. Nagularajah has left the trucking business, has no further interest in it, and is now employed in furniture sales. Since Midstar is being operated by a new independent owner, the road safety records of the companies managed by Mr. Nagularajah in the past no longer afford reason for belief that Midstar will not now operate safely and accordance with the law.
81I conclude, for the reasons set out below, that there is still reason to believe that Midstar will not operate safely or in accordance with laws relating to road safety, and the Registrar’s Order to cancel Midstar’s CVOR certificate should be confirmed.
82With respect to Midstar’s safety record before Ms. Cucos took over, the Registrar relies mainly on the testimony of Dustin Brown, a public safety Investigator with Alberta Transportation Carrier & Vehicle Safety, the Alberta government entity responsible for the regulation of commercial trucking in that Province.
83Mr. Brown conducted an investigation into Midstar’s operation in July 2020, which was prompted by information from the RCMP in British Columbia that a Midstar truck was involved in a single vehicle collision resulting in an impaired driving charge.
84Among other things, Mr. Brown found that:
although Midstar is an Alberta registered corporation, its records and decision-making function remained in Ontario;
Midstar’s written safety program was not fully developed or followed – there was inadequate safety law training, incomplete driver files, incomplete or missing road evaluations;
Midstar was not effectively monitoring driver compliance with hours of service requirements;
the hours of service records were faulty – drivers apparently used names different from their legal names making it difficult to track the hours of service;
drivers “habitually” drove over the maximum allowed hours. Several instances were discovered where drivers drove after reaching 70 hours in the previous seven days, or failed to take 10 hours off in a single day; and
a large amount of falsification was discovered in driver’s daily logs (when they were compared to fuel records) and several logs were tampered with using white-out.
85Mr. Brown testified that in his experience, the number of the hours of service violations that he discovered in Midstar’s operation was uncommon, as most companies voluntarily and effectively comply with the hours of service requirements. Mr. Brown noted that an earlier compliance audit conducted in May 2019 revealed many of the same violations – driver files missing documents, records not maintained at its place of business, and many hours of service violations.
86Midstar does not seriously dispute those findings. However, it says that Ms. Cucos took over in June 2020 while Mr. Brown’s investigation was underway and Ms. Cucos has taken several concrete steps to improve the company’s road safety performance. Among other things, she:
hired a safety compliance officer (Julius Jerad) on a two year contract whose job description includes development of safety programs, maintaining driver files, and auditing driver logbooks;
retained an outside safety consultant (Compliance Mentorz);
hired a qualified safety compliance assistant in Alberta with an office in Ontario;
hired a new dispatcher on a two year contract;
leased new office space in Calgary for Midstar’s Alberta registered office; and
leased new premises on Jane St. in Toronto.
87According to Midstar, it should be allowed to continue to operate - its safety record is improving, the company is being operated under Ms. Cucos’ new management more responsibly, and Mr. Nagularajah is no longer involved in Midstar in any way.
88In my view, despite the concrete steps that Ms. Cucos has taken to improve Midstar’s safety performance, there is still reason to believe that Midstar will not operate safely having regard to Ms. Cucos’ close relationship with Mr. Nagularajah, and Mr. Nagularajah’s repetitive pattern of operating his trucking business unsafely through successive corporations whose officers or directors were family members or associates.
89Mr. Nagularajah was named as an officer of Joyce Express, but after its CVOR certificate was cancelled due to its poor safety record, Mr. Nagularajah operated his trucking business under the names of successive corporations of which he was not officially an officer or director:
Haniya Enterprises Inc. – director was Mr. Nagularajah’s mother
BST – director was James Alexander, BST’s mechanic
Vanak Transportation – director is Mohammad Rasaei
103 Canada – director was Harvey Dennis – Mr. Nagularajah’s in-house paralegal
Midstar – director was Joyce Jayapalan – Mr. Nagularajah’s niece
90I also note that a 2015 Superior Court of Quebec decision in a civil dispute between Haniya Enterprises and Andrei Cucos (Ms. Cucos’ ex-husband) found that Mr. Nagularajah attempted to set up an arrangement with Mr. Cucos that would allow him to register and operate BST trucks under Mr. Cucos’ Quebec trucking company. At that time BST was being sanctioned by the MTO in Ontario and the arrangement would have allowed Mr. Nagularajah to avoid those sanctions and continue his trucking business under the Quebec company’s name. The court stated:
After a phone call, a first meeting took place in Montreal in September 2015. Andrei [Cucos] offers to sell 9253 for $30,000 but Raj [Mr. Nagularajah] refuses. Instead the latter seeks to use the administrative services of 9253 in order to be able to register a dozen BST trucks whose operating licences have been suspended in Ontario. Raj is not interested in the assets of 9253 and certainly not its debts. The interest for him lies in being able to quickly register his trucks in Quebec and generate income… The parties agree to a verbal agreement. From here the versions diverge.12
91According to Ms. Cucos, she was unaware of these arrangements and was mostly kept in the dark by her ex-husband. However, in my view, this case is significant because it confirms once again Mr. Nagularajah’s pattern of operating his trucking business unsafely under successive corporate names of which he is not officially an officer and director to avoid the consequences of the poor road safety record of companies he operated in the past.
92Section 47 of the Act requires me to consider whether there is reason to believe that:
…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 vehicle safely or in accordance with this Act, the regulations, and other laws relating to highway safety… (emphasis added).
93In determining whether there is reason to believe that Midstar will not operate safely now that it is owned by Ms. Cucos, her relationship with Mr. Nagularajah cannot be ignored. The relationship between them is not at arm’s length – they are common law spouses and parents of a child together.
94Under s.17(4) of the Act, entities are considered related if they are “related individuals”. I interpret that to include individuals who are related by marriage, including common law marriage. In my view, Ms. Cucos and Mr. Nagularajah are related individuals. Having regard to Mr. Nagularajah’s past record in operating unsafe trucking companies under the cover of corporations owned and directed on paper by an associate or family member, there is reason to believe that Midstar will not operate safely and in accordance with law.
95However, even if they are not “related individuals” within the meaning of s.17(4), I consider the above circumstances to be “other information that the Registrar considers relevant” and I reach the same conclusion.
96In summary, having regard to:
Midstar’s poor road safety record while being operated by Mr. Nagularajah until May 2020, when Mr. Nagularajah’s niece resigned as director and Ms. Cucos became a director;
the close personal relationship between Ms. Cucos and Mr. Nagularajah;
Mr. Nagularajah’s repetitive pattern of operating his unsafe trucking business through corporations apparently managed by others (including family members); and
the conspicuously poor safety record of the several companies operated by Mr. Nag as de facto director.
I conclude that there is reason to believe that Midstar will not operate safely or in compliance with road safety law and its CVOR certificate should be cancelled.
F. ORDER
97Pursuant to s. 50 (2) of the Highway Traffic Act, I confirm the Registrar’s Cancellation and Seizure Order dated September 12, 2019.
LICENCE APPEAL TRIBUNAL
Stephen Scharbach, Member
Released: February 24, 2021
Footnotes
- 10469904 Canada Inc. did not file a notice of appeal
- The Act, s. 50(1), 50(2).
- The Act, s.47(1), 47(2.1), 17(4).
- 2092889 Ontario Inc. (c.o.b. Joyce Express) [2011] O.L.A.T.D. No 344 (Licence Appeal Tribuinal).
- Ibid at paragraph 28, 29.
- 2080917 Ontario Inc. (Re), [2014] O.L.A.T.D. No. 254 at paragraph 4.
- Ibid at paragraph 20.
- Ibid at paragraph 83.
- Ibid at paragraph 87.
- 2343788 Ontario Ltd. o/a Vanak Transportation v Gadi Cohen, 2018 CanLII 89050 (ON LRB), paragraph 8
- Nagularajah v, Cucos [2018] JQ no 4560, paragraph 13
- 2386048 Ontario Inc. (c.o.b., Black Stallion Trucking) (Re), [2016] O.L,A.T.D. No. 54