Licence Appeal Tribunal

Date: 2021-05-17 File: 12791/92/MVDA

Appeals from decisions of the Board of Trustees, Ontario Motor Vehicle Dealers Compensation Fund to disallow a claim for compensation under s. 85 of O.Reg.333/08 made under the Motor Vehicle Dealers Act, 2002.

Between:

Andrea Bobenic and Carlo Spadafora Appellants

-and-

Board of Trustees, Ontario Motor Vehicle Dealer Compensation Fund Respondent

REASONS FOR DECISION & ORDER

ADJUDICATOR: Jennifer Friedland, Member

APPEARANCES: For the Appellant: Rebecca Langille-Rowe, Counsel For the Respondent: Husein Panju, Counsel

Dates & Location of Hearing: November 19, 20; December 4, 11, 2020; and January 7, 2021, by Video

A. OVERVIEW

1This is an appeal brought by the appellants, Carlo Spadafora (CS) and Andrea Bobenic (AB) from a decision of the Board of Trustees of the Ontario Motor Vehicle Industry Compensation Fund (the Board) denying their claims for compensation under s. 42(4) of the Motor Vehicle Dealers Act and s. 79 of Ontario Regulation 333/08 (the Regulation).

2The appellants are spouses. They each made claims for compensation for pecuniary losses purportedly arising from acts or omissions of a registered motor vehicle dealer whose registration was subsequently revoked.

3AB claims that she left her Honda Pilot on consignment with the dealer and was never paid when it sold. CS claims he provided $25,000 for a Chevy Silverado which the dealer did not deliver. He claims that he then agreed that the $25,000 being held by the dealer for the Chevy would be used instead for a Lexus. He provided a further $38,000 toward that purchase but the Lexus was never provided.

4The motor vehicle dealer was a longtime family friend of CS’s. The claimed trades of CS and AB were not well-papered.

5The Board denied the claims, primarily on the basis that there was a lack of evidence to substantiate them.

6The Board acknowledges that if I accept the appellants’ testimony about their purported trades, then the claims would satisfy the criteria for compensation from the Fund.

7I do accept their testimony.

8While there are plausible alternative scenarios that could explain the actions and events underlying the claims, and there are some unexplained anomalies on the evidence, the entirety of the evidence satisfies me that the appellants are telling the truth. If they are mistaken about some details, it does not impact the overall consistency of their claim. Nor do the unusual circumstances of their claims disentitle them to compensation under the current scheme.

9As a result, and for the further reasons outlined below, I am ordering the Board to pay $2000 to AB; and $45,000 to CS.

B. STATUTORY CONTEXT AND LAW

10The OMVIC Compensation Fund is a consumer protection program that allows consumers to apply for compensation for financial losses arising from certain transactions with a registered motor vehicle dealer.

11Subsection 42(5) of the Motor Vehicle Dealers Act establishes that a claimant’s entitlement to compensation shall be determined in accordance with the criteria and procedures prescribed in Ontario Regulation 333//08 (“the Regulation”).

12Subsection 79(1) of the Regulation provides that a customer of a registered motor vehicle dealer is entitled to compensation from the Fund in certain circumstances.

13At issue in this case is whether the appellants can show that:

i) the claim arose from a trade in a motor vehicle between the customer and the dealer – s.79(1)(a);

ii) the customer was acting in the trade as a consumer within the meaning of the Consumer Protection Act, 2002¹ – s.79(1)(d); and

iii) the consumer suffered a pecuniary loss – s.79(1).

14Section 79(4) of the Regulation sets out a number of disqualifying criteria, any one of which will render an applicant disentitled to compensation even if they meet the criteria under s.79(1). These are if:

(a) the customer is related, by blood or adoption, to the registered motor vehicle dealer against whom a claim is made or to a director or officer of the dealer;

(b) the customer is a spouse of the registered motor vehicle dealer against whom a claim is made or a spouse of a director or officer of the dealer;

(c) the customer is associated, as described in subsection 1 (2) of the Act, with the registered motor vehicle dealer against whom a claim is made;

(d) the customer was complicit in illegal conduct relating to the trade;

(e) the customer misrepresents the nature of the claim or provides false or misleading evidence in support of the claim; or

(f) the customer made a previous claim for compensation from the Fund based on the same facts or substantially the same facts.

15The Board relies on (e) and suggests that the appellants have misrepresented the nature of the claim or provided false or misleading evidence in support of it.

16The Board hesitates to allege that the claims are in fact false, but ultimately that is the Board’s position. The Board submits that the details of the appellants’ claims are too improbable or implausible to believe.

Burden of proof and powers of the Tribunal

17The Tribunal’s powers after a hearing are set out in s. 85(7) of the Regulation. After the hearing, the Tribunal may,

a) subject to subsection 82(3) and section 83, allow the claim, in whole or in part, and direct the Trustee to pay the amount allowed from the Fund; or

b) refuse to allow the claim.

18The burden of proof is on the appellants to satisfy me that they meet the criteria and are entitled to compensation.

C. FACTS

19In addition to hearing testimony from AB and CS, I also heard from the dealer, Gino Burzese (GB), who testified under a summons and after acknowledging that he had the opportunity to obtain independent legal advice.

20For the Board, I heard testimony from David Daily, the Manager of the Compensation Fund.

Background

21The purported trades underlying the appellants’ claims were made with Personal Touch Auto (PTA), whose registration as a dealership and salesperson under the Act were suspended in or around April 2017 and then revoked in May 2017.

22GB was the directing mind of PTA. He also owned and operated a service centre called Great Northern Auto Centre (GNAC). He was a long-time family friend of the appellant, CS.

23CS has been a practicing corporate lawyer for approximately 20 years. He is a partner in a firm in Sault Ste. Marie and a member of the Financial Services Tribunal of Ontario. He was close friends with GB’s brother growing up in Sault Ste Marie. Later, CS lived in Quebec, married, and had children. In or around 2009 his wife died, tragically, in a car accident, leading CS to move back to Sault Ste Marie with his two daughters. When he moved back, GB’s brother put him in touch with GB who was still living in Sault Ste. Marie. Their children were around the same age. GB became a strong and central support for CS and his daughters. Their children became friends and the two families became very close. They visited each other’s homes and the children played sports together. CS and GB also coached their children’s soccer club together.

24With respect to their professional relationship, CS helped GB and others in his family with legal matters; and GB helped CS with all vehicle-related matters.

25In or around 2011, CS started a relationship with the appellant, AB, who also has two daughters. She and her children moved to Sault Ste. Marie from southern Ontario in or around 2012. In 2014 CS and AB bought a house together and merged their two families.

The Claims

26The appellants’ claims arise from the following circumstances, according to the appellants:

CS’ claim

27On February 24, 2012, CS gave $25,000 to PTA as a bridge loan. This was something he did now and again for GB, but never for that high an amount. It allowed GB to purchase a desired vehicle for a customer with CS’s bridge loan, which would then be paid back with interest when the sale was completed. CS described that he had never had a problem being paid back by GB. He described this as a mutually beneficial arrangement. The financing was provided through a certified cheque drawn from his law firm’s account. CS explained that while the cheque was from the law firm, it was his personal draw. This fact did not appear to be in dispute at the hearing.

28CS was expecting GB to pay back the $25,000 in bridge financing within a few days of the sale. However, GB put him off, suggesting instead that he keep the funds in trust for a vehicle. CS agreed. He had been interested in purchasing a 2011 Chevy Silverado. GB told him he would look for one.

29CS explained that GB had taken deposits in the past to look for vehicles for him, and though not for this amount of money, he did not think to question this proposal. He trusted GB implicitly.

30Fast forward two years, and the Chevy still had not been purchased. CS explained that when he would follow up with GB, GB would say he still had not found the right vehicle or the right financing or he would otherwise just put him off. CS testified that he did not think to question GB. He took his answers in good faith. Eventually, they began discussing the prospect of CS getting a Lexus instead of a Chevy Silverado. CS described that his needs had changed and a Lexus now made more sense. According to CS, on July 24, 2014, CS gave $30,000 to PTA for the Lexus to be used together with the $25,000 initially being held for the Chevy. On June 19, 2015, CS claims to have paid a further $8000 toward the Lexus – though this amount was paid to Great Northern Auto Centre, the service centre, also owned by GB.

31GB testified that unbeknownst to CS – and, it seems, all of his other customers – the dealership was struggling financially during this period. GB described that his troubles began when he was defrauded by his bookkeeper though the circumstances are not fully clear. GB explained how he would maneuver cars on and off his “floor plan” to maximize his line of credit, including by transferring vehicles into PTA’s ownership while they were in for repairs and without the consumers knowing. GB described engaging in other manipulations to stay afloat, many of which were ultimately uncovered during the investigation that led to his registrations being revoked.

32PTA’s registration was suspended in or around April 2017 following a number of consumer complaints and an investigation by OMVIC which uncovered various acts and omissions on the part of the dealer, including failing to pay off liens on cars traded in; not providing warranties that customers had purchased and failing to pay in whole or in part for vehicles sold on consignment.

33CS never received the Lexus from PTA nor did he receive his money back.

34GB explained that it was easy to take advantage of CS during this period and simply keep putting him off while he juggled other customers. He testified that there was one time where he did find the vehicle CS was looking for and tried to get an extension on his floor plan to buy it but was denied. He admitted that he otherwise had kept CS’ money but was not actively looking for the vehicle for him. GB acknowledged that he was actively misleading his friend during this period. He did not think CS suspected any of this.

35CS testified that until PTA’s registration was revoked, he did not suspect that GB was in financial trouble. GB had been in business since 2002 and from CS’s perspective, had a good reputation in the community. CS had helped GB with some business transactions previously and did not get the impression that he had any financial difficulties. Rather, he appeared to be operating a successful business.

36According to CS, when he initially followed up with GB, he just accepted GB’s statements that GB was continuing to look for the vehicles – the Chevy at first, and then the Lexus, or whatever other excuse was provided. CS described that he did not push. He knew he was not GB’s top priority and was not desperate for the vehicle. He had a Hummer to drive. The family also had a Toyota Sequoia (which purchase plays into this narrative and will be discussed below). In retrospect, CS wondered if he should have been suspicious of GB when he was put off. However, he described that this was also to be expected with GB who CS described as a person who was slow to get around to things. A refrain during the hearing was “you have to understand Gino.” CS described how “everything always took a long time with Gino” and their relationship was “fluid and dynamic.” While he acknowledges he maybe ought to have seen signs that GB was in trouble, he did not see any such signs, nor did GB share his financial difficulties with CS according to both their evidence. CS maintains that he did ultimately expect GB to come through with his Lexus.

37CS was aware that the OMVIC Compensation Fund provided an avenue for him to claim for his losses in relation to the above arrangements. He explained that at first he did not want to pursue this avenue because he did not want to pile further trouble on his friend, whom he could see was hurting from the humiliation of having his licence revoked and struggling from the loss of his business. CS knew that GB owned a development property and held out hope that GB would be able to pay him back from its sale. When this did not seem likely, and when the deadline for making a claim had almost expired, CS made a demand for payment to PTA, which is a prerequisite for a claim made to the Fund. He then submitted his claim to the Fund for compensation.

38CS initially submitted two separate claims, one for $25,000 for the failed trade in relation to the Chevy; and another for $38,000 for the failed trade in relation to the Lexus, but he acknowledged at the start of the hearing that it was really just all one trade, and that the maximum he could claim was $45,000.

Proof of the claim

39CS did not initially have any documentary proof of the above agreements with GB other than the following three items submitted to the Fund:

a) a copy of the certified cheque to PTA dated February 24, 2012 in the amount of $25,000. The cheque was drawn from his law firm and had a re: line saying, “bridge finance for vehicle sale.”

b) a copy of Toronto Dominion bank draft, dated July 24, 2014 for $30,000 payable to PTA with no information in the re: line.

c) a copy of a Toronto Dominion bank draft dated June 19, 2015 to Great Northern Auto for $8000 with no information in the re: line.

40After the claims were denied and just prior to this hearing, three receipts were produced by GB which support CS’s claim. At the same time, a consignment agreement was produced by GB which supports AB’s claim. This will be discussed below.

41The receipts produced just prior to the hearing in support of CS’s claim are the following:

a) a receipt dated February 29, 2012, identified by GB as being in his handwriting, showing $25,000 received from CS with a note, “transfer funds from loan to deposit 2011 chev Silverado.” It also notes a stock number. According to GB, the receipt came from a booklet of receipts from the dollar store, which were the receipts used by PTA;

b) another dollar store receipt, this one dated July 24, 2014 showing $30,000 received from CS with a note that says, “deposit on lexus s460 (transport) plus 25k (feb 29/12)”; and

c) a typed receipt from Great Northern Auto Centre showing $8000 received from CS on June 19, 2015. The description line says, “final deposit on lexus s460 (30k +25k P.T.A.).” GB explained that these were the receipts used at Great Northern Auto and were generated from an invoicing software program.

42CS did not profess to know whether the receipts produced by GB in support of his claim were in fact made at the time of the transactions. He testified only that he had asked GB for any documentation of these transactions in his file and that GB did not produce them until just prior to the hearing. CS testified that it was ‘typical Gino’ not to get around to what was requested.

43CS testified that he did not keep any documentation himself relating to any of his transactions with GB. He testified that all documentation from PTA was always put in his file, which was kept on site at PTA.

44GB testified that he knew that CS had been asking for these documents and just did not bother getting around to providing them. He stated that he did not want to be reminded of this claim. He denied that they were false documents manufactured to support his friends’ claims.

45As noted above, in this late disclosure, GB also produced a purported consignment agreement that supports AB’s claim to have left her Honda Pilot on consignment with PTA. This was also only produced prior to the hearing and was not submitted to the Fund with the appellants’ initial claims.

46I shall turn to AB’s claim now. Although CS’ and AB’s claims are separate, the facts overlap.

AB’s claim

47Coincidental to the above timeline, AB and CS were looking for a new car for AB. She had been driving a Honda Pilot, which she described as a reliable, good car, in good condition. When she began dating CS, she started taking her Honda Pilot to GB for service, particularly for maintenance and safety checks before driving between Sault Ste Marie and southern Ontario where she was from. AB described how she trusted GB because of his connection to GS, and felt he provided good maintenance.

48AB’s claim relates to this Honda Pilot which she claims she left with GB to sell on consignment after she and CS purchased a Toyota Sequoia.

49In AB’s claim and in her affidavit, she said she left her Honda at PTA on November 7, 2014 to sell on consignment. At the hearing, she testified it would have been left toward the end of October / early November 2013 and that November 2014 was when she signed the consignment agreement.

50AB testified that GB told her she could get $4500 for it. She described having done research on the value of her car and was confident that it would sell for about $5000. She did not mind that GB would make a small profit on the sale. She testified that she did not initially sign anything. The car was just dropped off at PTA sometime after they bought the Toyota Sequoia and she expected paperwork to follow. She testified that she trusted GB because of his relationship with CS. She claims that about a year later, when the Honda had not sold and she would sometimes see it on GB’s lot and other times not see it there, she began to be concerned and asked CS to get her some documentation that GB still had her car for sale. AB claims that this is when she was given the consignment agreement dated November 7, 2014 which she claims she initialed.

51The consignment agreement does not list a price but is otherwise fairly detailed, including the VIN number of the Honda and other details. AB did not produce a copy of this agreement herself but asserts that the one produced by GB just prior to the hearing was the one she signed. GB testified that he did not normally list a price on a consignment agreement because then he would be stuck having to pay that price when the car sold, even if it sold for less. He was asked in cross-examination whether he knew it was against the regulations to enter into a consignment agreement without listing a price. He said he was not aware of that.

52AB was cross-examined on why in her claim and affidavit she purports to have left her car on the exact date of the consignment agreement, but then in testimony she claimed it was left about a year prior. The Board suggests that GB prepared a false consignment agreement to coincide with the date AB had put in her original demand letter and that AB then tailored her evidence at this hearing after learning that the car was transferred to PTA’s ownership in or around November 2013. AB denied this. She elaborated (at length) on the casual manner in which the car was first left at PTA, dropped either by her or by CS (she could not remember) and how she became increasingly frustrated with the lack of documentation and worrying that the agreement was not official. She used the date she finally signed the consignment agreement as the date of her claim.

53At one point in her cross-examination, AB agreed with the suggestion that saying November 7, 2014 was a mistake and that she must have meant to say, specifically, November 7, 2013 in her claim. This would make it quite a coincidence that she happened to sign a consignment agreement precisely one year later, to the day. However, I give little weight to AB’s agreement with this suggestion which was hastily given during cross-examination. I took AB to be acknowledging only that if she was supposed to have used the date she left the car, instead of the date she signed the agreement, then November 7, 2014 was a mistake and she should have said 2013. The rest of AB’s testimony was far less precise in terms of an exact date for when the Honda was first taken to PTA. Rather, she consistently testified that this happened in late October, early November 2013. CS’s testimony was consistent with this timeline. I find that evidence more reliable than AB’s agreement to the suggestion in cross-examination that she meant specifically November 7th of that year.

54As I will describe below, I do have some reservations about relying on the consignment agreement produced by GB just prior to the hearing. Ultimately, however, my misgivings do not make me doubt the overall veracity of AB’s claim. While I do need to ask myself whether she has presented false or misleading evidence in support of her claim, as I detail below, ultimately I cannot reach this conclusion.

55In terms of AB’s pecuniary loss, the MTO records show that PTA sold the Honda Pilot in or around June 2015. GB testified that he sold it to a dealer in southern Ontario but he could not recall the exact price. Initially in his testimony he said he sold it for “maybe $3000”. Later he said likely between $2000 or $2500. He admitted he never paid AB for the sale. He explained that, like with his other dealings with CS, when CS would follow up with him about the Honda on behalf of AB, GB would just put him off, telling him that the vehicle had not yet sold.

56From 2013 when she left her Honda Pilot at PTA to 2017 when PTA’s licence was suspended and then revoked, AB did not receive payment for her Honda Pilot. In her affidavit and demand letter she claims she was told at one point the Honda had been sold. In her testimony, she stated she only learned it had sold when she saw the MTO transfer documents during the hearing.

57AB gave lengthy explanations for why she did not press for payment from GB. Generally these explanations related to her deferring to CS and to being busy with managing an active household with four children all involved in competitive sports. She explained that she did raise the issue of payment with CS on a number of occasions but that she did not feel it was appropriate to raise it with GB directly. It was evident that she deferred to CS in terms of when or whether they took action against the dealer.

The Toyota Sequoia

58As noted above, the timing of AB leaving her Honda Pilot at PTA to sell coincides with AB and CS purchasing a Toyota Sequoia. CS described that neither AB’s Honda nor his Hummer was big enough for what was now a six-person family. CS came across an offer for a Toyota Sequoia from an acquaintance in town. He arranged the purchase through PTA who obtained financing for CS.

59One of the Board’s suggestions is that CS did not pay for the Toyota at all – that this vehicle was paid for by the funds CS had paid to PTA (at this point only the $25,000 had been paid, ostensibly still for the Chevy).

60The Board’s theory – that the Toyota was paid for with the funds for which CS is now seeking compensation – was raised for the first time at the hearing and was answered in reply. CS testified that after his examination-in-chief when he understood this to be the Board’s theory, he asked the local RBC for a copy of all documents relating to the financing, including a printout of the history of payments. Although the payment history sheet does not show the source of the payments, the RBC documents include CS’s signed authorization to make direct withdrawals from his account at National Bank in Quebec, together with a void cheque from that account. He also produced documents showing that the remainder of the RBC financing was factored into the couple’s purchase of their next Toyota Sequoia in 2018.

61CS noted that if the funds he gave GB for the Chevy and then the Lexus went toward the Toyota, then he would effectively have paid twice for the Toyota.

62The Board next suggested that while PTA may have obtained financing in CS’s name, it was perhaps GB who was making the payments on the loan.

63The Board’s suggestion that GB covered the payments on CS’s financing, was based on GB’s testimony in cross-examination that he sometimes assumed financing agreements as part of transactions with other consumers. The Board also notes that the RBC payment history sheet shows four missed payments – in September and October 2016 and August and October 2017 – which are within a ½ year on either side of PTA’s licence being revoked. The Board submits that the missed payments align with the timing for when GB would likely have been too short of funds to make the payments himself.

64CS and GB both denied that anyone other than CS made the payments on the Toyota Sequoia financing. CS testified that the account from which the funds were withdrawn was his Quebec account and was the one into which his compensation payments were deposited following his wife’s death. He explained that other payments also came from that account and occasionally it had insufficient funds.

65While the Board’s suggestion is plausible, the evidence is also consistent with what CS says happened in respect of payment for the Toyota. I accept CS’ evidence, which was detailed and consistent, that the Toyota was paid for through financing and that he was the one who made those payments.

66CS explained how he and AB operated and why the funds he had in trust with GB would not have been used for AB’s vehicle. He consistently described a separation of interests between AB and himself, including in relation to vehicles he purchased for himself. Thus his Hummer was his, and the anticipated Chevy and later the Lexus were to be his as well; whereas AB’s Honda Pilot had been hers and was now to be replaced with the Toyota Sequoia. CS explained that the Toyota was in both their names because AB would not qualify for financing on her own, but it was considered “her car.” He described that the same separation of vehicles continues today where he drives a Cadillac and she drives a newer model Toyota Sequoia which again is in both their names.

67There were some other anomalous transactions in respect of the Toyota Sequoia that the Board asks me to also find suspicious. For example, AB and CS took possession of the Toyota in or around late October / early November 2013, however the vehicle was not transferred into their names until April 2014.

68CS denied knowing that the vehicle had not been transferred into their names until April 2014, and he denied it was his signature on those registration documents.

69Here again, what the Board asks me to find as suspicious is also consistent with what GB explained he was doing with various vehicles at the time – namely, keeping them in his inventory and thus on his “floor plan” for as long as possible to extend his line of credit. I do not find this suspicious in the context of what GB admitted to doing. The evidence shows that AB began driving the Sequoia in or around Halloween 2013 and that it was then transferred to CS and AB’s names at the tail end of its usefulness to GB on his floor plan. The transfer without CS being aware of it, is also consistent with CS’s testimony that he just went along with whatever GB said was happening with respect to his vehicles.

70Another suspicious detail, in the Board’s submission, is that the Toyota was transferred out of AB and CS’s names and into PTA’s for a period between May 25, 2015 and June 19, 2015 – which is the same day that that CS paid a further $8000 to GB’s related company Great Northern Auto, ostensibly for the Lexus. The Board submits this is a coincidence that makes it more likely than not that the funds CS is now claiming for the Lexus were actually used for the Toyota.

71CS expressed surprise to learn that the Toyota went in and out of their names during this period. He claimed to have no knowledge of that. He acknowledged that it did seem that there might be a connection given that his payment of $8000 to Great Northern Auto and the transfer back of the Toyota to his and AB’s name both happened on June 19, 2015 but denied that the payment went toward the Sequoia. CS remained certain that the $8000 was toward the Lexus. He explained that he had been asked to top up the previous amounts to cover costs of the particular model GB was ostensibly looking at. He said it did not seem strange to pay it to Great Northern Auto instead of PTA as he saw them as being interconnected and both operated by GB.

72GB’s testimony was consistent with CS’ regarding the $8000 payment being for the Lexus, even though it was paid to Great Northern Auto.

73GB also explained that the transfer in ownership during that period would again likely have been so he could show the car on his floor plan. He was sure that neither CS nor AB would have known that the vehicle had been transferred out of their names during this period. Both CS and AB denied any knowledge of those transfers.

The claims and the denials

74The appellants submitted their claims on February 19, 2019. Mr. Daily testified that he asked for some additional information pertaining to the claims and posed various questions to the claimants. The email correspondence between Mr. Daily and counsel for the appellants was before me in evidence. At some point (though the timing is not clear), CS was able to provide the copies of the certified cheque and the bank drafts provided to PTA, as set out above, but no further documents were provided. The appellants also each submitted an affidavit in support of the claims which it appears were intended to fill in the gaps left by the lack of documentation.

75By letters dated June 12, 2020 the Board denied the appellants’ claims.

76The Board addressed CS’s claims together, writing:

…With respect to the claim for $25,000, it was the Board’s decision to deny the claim as you do not meet the eligibility criteria set out in section 79(1)(d). The Board concluded that you were not acting as a consumer as defined in the Consumer Protection Act, 2002, as you were providing financing to the dealer. Furthermore you failed to provide any evidence to substantiate that your pecuniary loss arose from the trade in a motor vehicle between yourself and the dealership.

With respect to the claim for $38,000, it was the Board’s decision to deny the claim as you failed to provide any evidence to substantiate that your pecuniary loss arose from the trade in a motor vehicle between you and dealer. Furthermore, $8,000 of the funds were paid to a company that is not a participant in the fund. …

77With respect to AB’s claim, the Board wrote:

… It was the Board’s decision to deny your claim as you do not meet the eligibility criteria set out in section 79(1)(d), as there is no evidence to substantiate that you suffered a pecuniary loss as a result of the trade in a motor vehicle between yourself and the dealer. …

78Both letters conclude by indicating the avenue to appeal the decisions to this Tribunal.

Analysis

79The Regulation entitles a customer to compensation from the Fund in respect of a claim for a pecuniary loss provided certain criteria are met.

80The Board denied the appellants’ claims primarily on the basis that the appellants were unable to provide proof that they met the criteria. Now that the claims have been appealed, the claims come before me de novo. Thus my task is not to decide whether the Board was justified in denying the claims, but rather whether on the whole of the evidence now presented, the appellants meet the eligibility criteria under the Regulations which would in turn entitle them to compensation.

81As I stated in the introduction to these reasons, and as the Board agrees, the case turns on credibility. If I accept the appellants’ testimony, then they are entitled to compensation. In other words, there is no dispute over whether the appellants would meet the definition of a consumer, or whether the claimed “trades” meet the definition of trade. Equally there would be no dispute that there was pecuniary loss suffered as a result of those trades (though the quantum is not necessarily settled as discussed below).

82The Board submits that I should assess the appellants’ entitlement under s. 79 of the Regulation in the context of the appellants’ overall version of events. The Board invites me to ask myself whether the appellant’s version of events makes sense on a balance of probabilities, and then to use that finding as a proxy for whether they meet the eligibility requirements.

83While the Board shies away from alleging that the appellants have submitted fraudulent claims to the Fund, ultimately that is the Board’s position. It submits that the appellants’ version of events is “inherently improbable” and that there are more probable explanations that better cohere with the evidence.

84The Board submits that if the appellants’ overall stories do not make sense, then it follows that I cannot find, on a balance of probabilities, that they have met the eligibility criteria.

85This principle is described in Faryna v. Chorny, 1951 CanLII 252 (BC CA), [1952] 2 DLR 354 (BCCA), a case regularly cited by Courts and Tribunals when assessing credibility:

…Opportunities for knowledge, powers of observation, judgment and memory, ability to describe clearly what he has seen and heard, as well as other factors, combine to produce what is called credibility.

The credibility of interested witnesses, particularly in cases of conflict of evidence cannot be gauged solely by the test of whether the personal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of the witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions (…) Again, a witness may testify to what he sincerely believes to be true, but he may be quite honestly mistaken. (para. 356-357) (emphasis added).

Analysis of AB’s claim

86The Board suggests the following implausibilities in relation to AB’s claim:

a) If AB wanted a convenient way to sell her car, as she claimed, she would have just sold it, even if just to PTA, rather than leave it on consignment.

b) It is not probable that she would wait for a year to get a signed agreement.

c) It is equally improbable is that she would not keep a copy of the agreement, once signed.

d) It is not probable that she would wait so long to submit a claim;

e) It is not probable that in her claim she would say that her car was left on November 7, 2014, and that the Consignment Agreement ultimately produced would be dated November 7, 2014, particularly since she admitted during the hearing that the car was actually dropped off about a year prior.

f) The Board submits that the coincidence of a suddenly appearing November 7, 2014 consignment agreement becomes even more implausible given AB’s agreement in cross-examination, that in her claim she meant to say she dropped the car off, specifically, on November 7, 2013.

g) The Board submits that a more likely scenario is that the consignment agreement was fudged to meet the date AB put on her claim and that AB tailored her evidence to explain the change in ownership of the Honda to PTA in 2013.

87The Board does not ask me to conclude that AB produced false documentation herself but submits that if I find that the consignment agreement is false, then –since she admitted signing it – this would be misleading evidence sufficient to defeat her claim pursuant to s. 79(4); even if she were otherwise entitled to compensation from the Fund.

88I agree with the Board that it seems a coincidence that the consignment agreement produced is dated November 7, 2014, the same date AB initially claimed as the date she left her car with PTA. I further agree that this coincidence would be compounded were I to accept that she meant to state in her claim, specifically, November 7, 2013, as the date she dropped her car off. If that were the case, then it would indeed strain credulity that she would have happened to sign a consignment agreement exactly one year to the day later. However, as explained above, I do not find her agreement to the suggestion that she dropped the car specifically on November 7, 2013 to be reliable. I found she was otherwise consistent in her testimony that she dropped the car in late October/early November 2013 after they picked up the Sequoia, but that she only signed the consignment agreement about a year later. In that context, it makes sense that she used the date of the consignment agreement as the date of her claim, as she testified.

89Ultimately, while I do question the veracity the documents produced by GB, my suspicions in that regard are simply that, suspicions. It is certainly possible that GB created the consignment agreement to support AB’s claim, but I cannot agree that this is a more likely scenario. It is equally possible that AB did in fact sign that agreement on November 7, 2014. My uncertainty cannot amount to proof that she has submitted false or misleading evidence such as to defeat her claim under s. 79(4).

90Furthermore, when I consider the whole of AB’s evidence, I do not doubt that that she in fact left her Honda Pilot with PTA in or around 2013 with the understanding that PTA would sell it on her behalf and she would receive at approximately $4500. I say “approximately” because I do not have evidence to satisfy me on a balance of probabilities that the agreement was that she would be paid that amount, regardless of what the car sold for. I find, rather, that she expected that amount. Ultimately, the only proof I have of what it in fact sold for is GB’s evidence that it would have been between $2000 and $3000. I will therefore allow the claim for $2000.

91I do not otherwise find AB’s story implausible or improbable; in my view, it makes sense that she would leave her vehicle with PTA to sell rather than trying to sell it on her own. Given the deference that AB gave to CS as the go-between between her interaction with GB, I do not find it improbable that she dropped the car off without a signed agreement. AB expressed discomfort in leaving her car in this loose and undocumented way but initially this was the most convenient way of getting rid of her car once she was driving the new one. AB described that she would not normally have acted that way if she were selling her car herself. But she deferred to CS and his relationship with GB. This also explains why she complained to CS about GB not paying her or updating her but took no action on her own. It further explains why she followed CS’ lead in deciding when or whether to make a claim against GB at all. Regarding the consignment agreement not listing the $4500, I do not find it improbable that she would not have noticed this. The consignment agreement is otherwise fairly detailed. Moreover, it is certainly in keeping with GB’s practices that he might avoid putting down a price, in order to minimize his own risk of loss – even if this practice were in breach of the regulations as the Board suggested.

Analysis of CS’ Claim

92The Board invites me to also find a number of improbabilities in CS’ version of events. For example:

a) GB’s receipt for the $25,000 purportedly being held for the Chevy lists a stock number which GB testified would have been the stock number of the Chevy in his inventory. If this were a true document, the Board submits it is improbable that GB would not have just sold him the Chevy he had in his inventory.

b) It is improbable the CS would not have pursued the Chevy more vigorously.

c) It is improbable that the funds still in trust with GB would not have been used toward the Sequoia. The Board notes that the sale price according to the Bill of Sale of the Sequoia was approximately $63,000 which was the overall amount claimed by CS for the Chevy/Lexus deal.

d) It is improbable that CS would not have put the details of why the funds were being paid in the re: line on the $30,000 and $8000 payments purportedly going toward the Lexus.

e) It is improbable that $8000 would be paid to GB’s other entity, Great Northern Auto on the same day that the Toyota Sequoia was transferred back into CS and AB’s names. The Board says that this coincidence makes it more likely that the payment was for the Toyota.

f) It is improbable that CS would make such little effort to recoup his payments. The Board submits that as a corporate lawyer he would have taken more action.

g) It improbable that CS would not have told AB about the payments made to GB.

h) It is improbable that he would wait 2 years to make a claim, if it were a legitimate claim.

93The Board submits that a more plausible scenario based on the evidence is that the funds paid by CS were either a loan to GB or payment for the Toyota Sequoia.

94I do not agree. A scenario where CS paid funds to PTA other than for the purpose to which he testified requires me to disbelieve CS’ evidence. I find that I do not disbelieve his evidence. Rather I find it consistent and convincing. I also do not agree with the Board’s recitation of improbabilities as set out above.

95With respect to the Chevy stock number on the $25,000 receipt and the improbability that GB would not have just sold CS the Chevy if this were a true receipt. I do not find this improbable given what GB explained about needing to keep his inventory on the floor. He testified that he “couldn’t afford to give it to him” as he had already spent his $25,000. While I do have some difficulty relying on the documents produced by GB long after they were purportedly requested, in this case, I find the “stock number” to be a detail supportive of their legitimacy and of CS’ claim overall.

96Regarding CS not papering his transactions, this is consistent with CS’s testimony about being his own worst enemy when it comes to papering his own life. He described not being a good lawyer for himself and not thinking to paper his agreements with his friend, GB, whom he trusted. This included not thinking to put a re: line on the funds provided. I note that the Board does not dispute that CS in fact paid the funds to GB, it only disputes the purpose of those funds. So whatever their purpose, there were no details provided on the re: line on those cheques. In other words, improbable or not, this is, in fact, what CS did.

97CS’ failure to have pursued the purchases is also consistent with the fact that he was friends with GB, knew GB to take a long time getting around to things, and did not have reason to suspect that GB was stringing him along. CS was patient, had other vehicles to drive, and assumed he would get his Lexus sooner or later. Once GB’s wrongdoing was uncovered and CS came to understand that he had been hoodwinked by his friend, along with others of GB’s customers, he did not wish to compound his friend’s troubles by making a claim. Further he was hopeful he could collect outside of a formal claim. I do not find it improbable that he would wait until the tail end of the limitation period before making a claim. I do not see how the delay in bringing the claim makes it any less likely that the claim is legitimate.

98I reach a similar conclusion with respect to the Board’s suggestion that it is improbable that CS would not tell his wife that he had over $50,000 in trust with GB. Regardless of the purpose of these funds, she did not know about them. This does not make it less probable that the funds were for the vehicles as CS claims.

99Regarding the Board’s proposed link between the Toyota Sequoia and the funds provided by CS to GB, the Board points to the ultimate sale price on the Bill of Sale for the Toyota (produced with the RBC financing records) which was roughly $63,000 and suggests that since this is the amount CS is claiming he paid, all in, for the Lexus, it is more probable that those payments went toward the Toyota. This is tied in with the Board’s suggestion, already addressed above, that it might have been GB who made the payments on the RBC financing. The Board’s theory has its own improbabilities. For example, it does not explain why CS would have paid $30,000 to PTA nine months after taking possession of the Sequoia and four months after the financing payments began. It also does not explain why $8000 would then be paid a year after that toward the Toyota. The scenario that the funds paid by CS went toward the Toyota also conflicts with CS’ testimony that he was the one who made the RBC payments, which evidence I accept, as already outlined above.

100The coincidence of providing the further $8000 ostensibly for the Lexus on the same day that ownership of the Toyota Sequoia was transferred back into the appellants’ names is also not improbable in my view, given what GB explained about transferring ownership of vehicles into his name in order to put them on his floor plan and extend his inventory without the owners knowing. I found that both AB and CS were genuinely perplexed to learn of the changes in ownership of the Sequoia to and from PTA at that time.

101It is possible, of course, that GB and CS were in cahoots with each other. It is possible that the funds paid to PTA or Great Northern Auto were loans paid to GB that CS just could not collect on, so he has made up the present scenario in order to claim those amounts from the Fund. Possibly, GB loaned vehicles off his lot to CS to drive while transferring ownership of GB’s vehicle to himself to extend his inventory. Possibly, CS was paid back for the funds provided by getting the Toyota Sequoia from GB, signing for the financing, but having GB cover the payments. These are all plausible explanations based on the evidence.

102But also consistent with the evidence is what CS says happened in this case. That he provided funds to PTA first for a loan and then instead of getting paid back, he agreed that GB would keep the funds in trust for a 2011 Chevy Silverado. The Chevy never materialized and he decided instead to get a Lexus. GB dragged his heels, telling his friend he was still looking for that Lexus and CS did not suspect he was being strung along. Finally, GB’s dealership licence was revoked. Then when there was no other way for CS to recoup his losses, he made his claim to the Fund.

103I find CS’s testimony to be believable. The details of the case as I have laid them out above likely do not capture the nuance and consistency of CS’s descriptions that do, ultimately, satisfy me that his claim is legitimate. Suffice to say, I did not have the impression he was lying. His claim was tested in cross-examination. He elaborated on the details and he acknowledged that he was, in retrospect, “a moron” to have been so trusting. Yet I accept that he was that trusting. As a result, he was taken in by this dealer.

D. CONCLUSION

104The relationship between the appellants and GB does not disentitle them to compensation under the legislation as it currently is written. I agree with their counsel that in some ways this very relationship is what made them more vulnerable to GB’s wrongdoing.

105The legislation also does not require any specific type of proof in support of a claim. While one can hardly blame the Board for being distrustful of a claim that lacks documentary proof to back it up, I am in a different position than the Board on this hearing de novo, having had the benefit of hearing from the appellants directly and being able to weigh their evidence against the whole of the evidence before me.

106While the documentary proof of the appellants’ claims was poor and was not necessarily improved by the appearance of supporting documents from the dealer long after they were requested and right before the hearing; still, I cannot say that those documents are false. Furthermore, I do not find it necessary to rely on them in order to believe the appellants’ claims.

107Ultimately, I am allowing both claims because I believe the core of the appellants’ testimony. If there are inaccuracies or anomalies on the peripheries of the evidence, they do not diminish the essence of their claims. On the whole, I found both appellants’ evidence convincing, plausible, and honest.

108For AB, while her evidence was wanting in places, being somewhat jumbled and hastily given, it was consistent and believable in its essence. She left her car to be sold by PTA on her behalf. She was a consumer in that context and leaving her car in this fashion constituted a trade. The evidence of her pecuniary loss is the price that GB said the car sold for. I will allow the lowest value that GB recollected receiving for its sale which is $2000.

109For CS, he originally made two separate claims to the Fund, one for $25,000 for the Chevy, and the other for $38,000 for the Lexus; however, the appellant acknowledged at the start of the hearing that the claim was ultimately all for the Lexus and therefore limited to $45,000. The Board agrees that if I believe his testimony, then he meets the definition of a consumer who suffered a pecuniary loss arising from a trade. As stated, I do believe his testimony. I am therefore allowing the claim in that amount of $45,000.

E. COSTS

110The appellants have asked for the opportunity to seek costs. The appellant made partial submissions at the time of the request, submitting that a costs award would deter the Board from alleging fraud against upstanding members of the community who make a claim to the fund without supporting documentation.

111Following the process agreed to at the hearing, my order below provides the timelines for written submissions on costs, should either party still wish to bring such a claim.

112The parties are reminded that costs are limited under Rule 19 of the Tribunal’s Rules to a maximum of $1000 per day and there are limited grounds for when they can be ordered.

F. ORDER

113Pursuant to s. 85(7) of the Regulation, the Trustee is directed as follows:

a) to pay Andrea Bobenic $2000 in compensation for her claim against Gino Burzese and Personal Touch Auto made February 19, 2019; and

b) to pay Carlo Spadafora $45,000 in compensation for his claim against Gino Burzese and Personal Touch Auto made February 19, 2019.

114Submissions on costs, if any, shall be made in writing, served on the other party, and filed with the Tribunal by email, on or before May 21, 2021.

115Responding submissions, if any, shall be provided by May 28, 2021.

116Reply, if any, shall be provided by June 4, 2021.

Footnotes

1. 1S.O. 2002, c. 30, Sched. A.