Date: 2021-10-01

File: 12791/MVDA and 12792/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 ON COSTS

ADJUDICATOR: Jennifer Friedland, Member

APPEARANCES:

For the Appellant: Rebecca Langille-Rowe, Counsel

For the Respondent: Husein Panju, Counsel

Date of Order: October 1, 2021

DECISION AND ORDER ON COSTS

Overview

1This is a costs application brought by the appellants pursuant to Rule 19.1 of the Common Rules of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission (“the Rules”).

2The appellants, Carlo Spadafora (CS) and Andrea Bobenic (AB), had appealed from the decisions of the respondent, the Board of Trustees of the Ontario Motor Vehicle Industry Compensation Fund (the Board) denying their claims for compensation.¹

3The appellants were successful following a hearing and now seek costs from the respondent, claiming that the Board acted “unreasonably, disingenuously, and in bad faith in order to attempt to take the Appellants by surprise at the hearing.”

4The basis for what the appellants claim was a “surprise” was the respondent’s allegation at the hearing that the claims the appellants made to the fund were false. The appellants characterize the respondent’s position as equivalent to it having made “unsubstantiated claims of fraud and perjury” against the appellants.

5For the reasons given below, I disagree with the appellants’ characterization of the respondent’s conduct. I find this is not an appropriate case for costs.

Law

6The authority to grant costs following a hearing stems from s. 17.1 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 (SPPA) and Rule 19.1 of the LAT Rules.

7Section 17.1(1) of the SPPA allows a tribunal to order a party to pay all or part of another party’s costs in a proceeding in circumstances set out in that tribunal’s rules.

8Section 17.2(2) of the SPPA provides an exception, however, stating that a tribunal shall not make an order to pay costs unless such rules have been made and unless “the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or a party has acted in bad faith.”

9Under s. 17.2(4), the tribunal may make rules with respect to: (a) the ordering of costs; (b) the circumstances in which costs may be ordered; and (c) the amount of costs or the manner in which the amount of costs is to be determined.

10The Tribunal has made such rules.

11Rule 19.1 provides the circumstances for requesting costs at this Tribunal. It echoes the language of the SPPA, stating:

Where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Tribunal for costs.

12Rule 19.5 provides that the Tribunal may deny or grant the request for costs or award a different amount than requested.

13Rule 19.5 also provides that in deciding whether to grant costs and the amount of costs to be ordered, the Tribunal must consider “all relevant factors” in deciding whether costs should be paid and in what amount. Pursuant to that Rule, relevant factors include:

• the seriousness of the misconduct;
• whether the conduct was in breach of a direction or order issued by the Tribunal;
• whether or not a party’s behaviour interfered with the Tribunal’s ability to carry out a fair, efficient, and effective process;
• prejudice to other parties; and
• the potential impact an order for costs would have on individuals accessing the Tribunal system.

14Rule 19.6 provides that costs shall not exceed $1,000 for each full day of attendance at a motion, case conference or hearing.

15In this case the appellants seek costs in the amount of $13,000 which represent the full purported costs of counsel attending and preparing for a five-day hearing.

16In the alternative, the appellants seek $7,800 which represents costs for three days of the hearing. As described below, the appellants assert that but for the respondent’s conduct -- which the appellants say was unreasonable – the additional days would not have been necessary.

17Applying Rule 19.6, the maximum allowable amount of costs that could be claimed is $1,000 per day or $5,000 in this case.

Background facts

18The facts of this case are set out in my reasons for decision allowing the appellants’ appeals. This decision can be found at 2021 CanLII 43532 (ON LAT)².

19In brief, the facts relevant to the appellants’ claim for costs are as follows:

20The appellants are spouses who had each claimed compensation from the OMVIC compensation fund for pecuniary losses purportedly arising out of trades with a motor vehicle dealer whose licence had since been revoked.

21AB claimed that she left her Honda Pilot on consignment with the dealer and was never paid when it sold. CS claimed he provided $25,000 for a Chevy Silverado which the dealer did not deliver. He claimed 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.

22The motor vehicle dealer was a long-time family friend of CS’s. The claimed trades of CS and AB were not well-papered. The Board denied the appellants’ claims primarily on the basis that there was a lack of documentary evidence to substantiate them.

23At the time that the claims were submitted by the appellants and for over a year following as the claims were investigated, the appellant CS had no proof to support his claims other than proof that certain amounts were paid to the dealer. There was no record of what the payments were for. With respect to AB’s claim, there was no record of her car actually being left on consignment.

24There were further issues with the claims, including that the trades complained of had occurred approximately seven years earlier than when the claims were made to the Fund and neither appellant had taken any action in response to their purported losses while the dealer was in business. As well the appellants had other transactions with the same dealer – for example they had purchased a Toyota Sequoia around the same time but apparently not with the funds being held by the dealer. Additionally, there were inconsistencies with respect to dates provided by the appellants and other unexplained anomalies with respect to ownership of the Toyota Sequoia and timing of the claimed trades.

25In short, as stated in my decision at paragraph 106, it was not surprising that the claims were initially denied by the Board.

26After the appellants had appealed the denial of their claims to this Tribunal and just prior to the hearing, the appellants produced supporting documentation – purportedly coming from the dealer – which aligned with the appellants’ claims.

27As noted in my decision, the appellants were not necessarily helped by the sudden production of documents that aligned with their claims and which could have been produced earlier. I found that the late disclosure of those documents was suspicious, and I questioned their veracity.³

28Nonetheless, despite the frailties of the appellants’ claims, I ultimately allowed their appeals and ordered the Board to compensate them for their losses. I wrote as follows at paragraph 105 of my reasons.

105…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.

The position of the parties

29The appellants submit that the respondent acted “unreasonably, disingenuously, and in bad faith in order to attempt to take the Appellants by surprise at the hearing.”

30The basis for what the appellants claim was a “surprise” was the respondent’s allegation at the hearing that the claims the appellants made to the fund were false. The appellants characterize the respondent’s position as equivalent to it having made “unsubstantiated claims of fraud and perjury” against the appellants.

31The appellants rely on a case from the Superior Court of Justice, Expoed Inc. v. Anaca Technologies Ltd⁴ for the proposition that unproven allegations of fraud frequently attract a high cost award.

32The appellants also rely on a decision of this Tribunal – S.W. and Aviva Insurance Company of Canada⁵ - in which the surprise withdrawal of an issue at the hearing was found to warrant a costs award. In that case, the respondent insurance company had conceded at the start of the hearing that the applicant was entitled to income replacement benefits. This was contrary to the position it had taken in the lead-up to the hearing and after the applicant had gone to some expense to meet the issue at the hearing, including by having brought a motion to allow her witnesses to appear by telephone. The member found that it was disingenuous for the respondent to pretend that the applicant’s entitlement was never an issue and awarded $1,000 in costs. The appellants appear to rely on this case for the proposition that any surprise at a hearing will be compensated for by costs.

33The respondent denies that it acted unreasonably or that its conduct ought to attract a costs award.

34I agree with the respondent’s position.

Analysis

35While the Board did not explicitly state in their denial letters that the appellants’ claims were not believed, that is the obvious implication of the denial. Both appellants had submitted sworn affidavit evidence in support of their claims. Had those affidavits been accepted, the claims would have been paid out.

36On that basis alone, the appellants ought not to have been surprised that their credibility would be challenged at the hearing of their appeal.

37The respondent acknowledged at the start of the hearing that if the chronology and events provided by the appellants were true, then they both met the criteria for compensation.

38With credibility being the core issue at the hearing, the respondent developed various theories as the hearing progressed aimed at undermining the appellants’ claims.

39In particular, the respondent cross-examined CS on whether the funds provided to the dealer may have been for a loan. The respondent also cross-examined both appellants on the interplay between the purchase of the Toyota Sequoia in or around the same time that CS’ funds and AB’s vehicle were being held by the dealer. The respondent’s suggestion was that the funds provided by CS and/or the vehicle purportedly left on consignment by AB may have been used to fund the Toyota Sequoia instead of for the purposes claimed.

40The appellants claim they were surprised by this line of questioning and complain that they incurred additional costs by having to call evidence to show how the Toyota was financed and prove that it was not paid for by CS’ funds in trust with the dealer or set off against the value of AB’s Honda Pilot.

41The respondent submits that the appellants had plenty of notice that the Toyota Sequoia might be relevant to the respondent’s position. The respondent points, for example, to its investigator’s correspondence with the appellants – prior to the denial of the claim – asking questions about the Toyota. Further, the respondent produced MTO documents relating to ownership of the Toyota prior to the hearing.

42In my view, regardless of whether the appellants were surprised by the respondent’s suggestion that the Toyota Sequoia may have been paid for with the funds that CS had in trust with the dealer or set off against the Honda Pilot, their surprise does not render the respondent’s line of questioning unreasonable.

43As recognized in S.W., (the LAT case relied on by the appellants) at paragraph 40 “…litigation often presents a moving target and positions change as evidence emerges.”

44Moreover, even if the appellants were in fact surprised by this line of questioning, the remedy is that which they were afforded at the hearing – namely the opportunity to call further evidence with respect to the Toyota Sequoia on the basis that they could not have anticipated that line of questioning in order to have called that same evidence during their case in-chief. The remedy is not a costs award against the respondent.

45The appellants further assert that the respondent was “unrelenting in its goal to find fraud” and that it “made no efforts to find documentary evidence or provide oral evidence to support its allegations.” Again, I disagree. As noted above, the respondent had produced and relied on the ownership records of the Toyota Sequoia as one approach to undermining the appellants’ claims. The respondent was also entitled to rely on evidence from the appellants themselves elicited in cross-examination in support of its position that their claims were unreliable. I do not find the respondent’s conduct unreasonable in this regard.

46The appellants further complain that the respondent “attempted to down-play the seriousness of its allegations throughout the course of the hearing and obfuscate its true position.”

47I agree that counsel for the respondent was hesitant to articulate the implications of its position – namely that if the funds provided to the dealer by CS and/or the vehicle purportedly left with the dealer by AB were not for the purposes claimed, then the corollary was that the appellants had knowingly made fraudulent claims to the OMVIC compensation fund. Counsel for the respondent clearly had difficulty in making this allegation directly to CS – who was a lawyer with a good reputation in the community. Nonetheless, counsel did acknowledge, when pressed, that the respondent was ultimately taking the position that the appellants’ claims were false. It acknowledged this position as early in the hearing as the appellants’ opening statement and, as I state above, this position was, in my view, implicit in the Board’s denial of the claims in the first place.

48I note also that the respondent did leave open the possibility that the appellants were simply misremembering the events. In this way, it did endeavour to temper any allegation of outright fraud.

49Ultimately, while I do appreciate the sentiment expressed by the appellants in this application for costs – that a person’s reputation ought not to be impugned simply as a result of having made a claim to the OMVIC compensation fund – it was the appellants’ choice to claim compensation from the Board with little in the way of supporting documentation, and the appellants’ choice to appeal the Board’s denial of those claims to this Tribunal, knowing that they would have the burden of proving their legitimacy.

50The appellants made claims which they knew or ought to have known would be questioned. The claims were in relation to purported trades occurring many years ago, with no documentary proof that the funds provided were for the purposes claimed, and where no action was taken in the interim to obtain satisfaction from the dealer, who was a friend. Moreover, there were inconsistencies with respect to dates, anomalies with respect to ownership and coincidental transactions that raised further suspicion about the claimed trades, which suspicion was only compounded by the very late disclosure of supporting documents from the dealer that perfectly aligned with the appellants’ claims.

51The fact that I ultimately found the appellants’ evidence believable – despite its anomalies and inconsistencies – does not render the respondent’s position in taking an opposite view unreasonable, frivolous, vexatious or made in bad faith.

52This is not an appropriate case for costs.

Footnotes

1. 1The claim was made under s. 42(4) of the Motor Vehicle Dealers Act and s. 79 of Ontario Regulation 333/08 (the Regulation)
2. 2Bobenic and Spadafora v. Board of Trustees, Ontario Motor Vehicle Dealers Compensation Fund, 2021 CanLII 43532 (ON LAT)
3. 3See paragraphs 89, 95, 106 of the decision.
4. 42017 ONSC 6513 (Expoed)
5. 52018 CanLII 83535 (ON LAT) (S.W.)