Yarco Developments Inc. v. Registrar, Home Construction Regulatory Authority, 2022 CanLII 120031

Date: 2022-12-14

Appeal from a Notice of Proposal to refuse to renew registration pursuant to the New Home Construction Licensing Act, 2017, S.O. 2017, c. 33, Sched.1

Between:

Yarco Developments Inc.

Appellant

and

Registrar, Home Construction Regulatory Authority

Respondent

RECONSIDERATION DECISION

Adjudicator: Colin Osterberg, Member

Appearances:

For the Appellant: Jack Lloyd, Counsel

For the Respondent: Demetrios Yiokaris, Counsel Mireille Giroux, Counsel

REASONS FOR DECISION AND ORDER

A. Overview

1In its decision dated September 6, 2002, the Tribunal set aside the Registrar’s Notice of Proposal dated November 2, 2021, as amended on May 27, 2022 (“NOP”), and directed the Registrar to renew the appellant’s licence as a vendor and builder under the New Home Construction Licensing Act, 2017, S.O. 2017, c. 33, Sched.1 (the “Act”).

2The Registrar requests that the Tribunal reconsider its decision on the basis that it made an error of law or fact such that the Tribunal would likely have reached a different result had the error not been made.

3The Tribunal will not allow a request for reconsideration unless one or more of the criteria listed in Rule 18.2 of the Licence Appeal Tribunal, Animal Care Review Board, and Fire Safety Commission Common Rules of Practice and Procedure, Version I (October 2, 2017), are established.

B. ISSUES

4The issue to be decided on this reconsideration is whether the Registrar has established that the Tribunal made an error of fact or law such that the Tribunal would likely have reached a different result had the error not been made.

C. Result

5For the reasons which follow, the Registrar’s request for reconsideration is denied.

D. analysis

6Manoharan Subramaniam (“Subramaniam”) is the owner of the appellant corporation and its sole director and officer. His past conduct includes criminal convictions for activities he participated in more than 15 years ago and which the Registrar submits disentitles the appellant to licence renewal.

7Following a hearing, the Tribunal found that the past and present conduct of Subramaniam affords reasonable grounds for belief that the appellant’s business will be carried on in accordance with the law and with integrity and honesty and that the appellant is not disentitled to a licence renewal under s. 38(1)(b)(iii) of the Act.

8Also, the Tribunal was not satisfied, on a balance of probabilities, that the appellant will not carry on business in accordance with the law or with honesty and integrity and is not disentitled to a licence renewal under s. 38(1)(g) of the Act.

9Finally, the Tribunal was satisfied that the appellant can reasonably be expected to be financially responsible in the conduct of business based on its past and present financial position and the past and present financial position of Subramaniam and is not disentitled to a licence renewal under s. 38(1)(b)(i) and (ii) of the Act.

10As a result, the Tribunal directed the Registrar to renew the appellant’s licence without any conditions as a vendor and builder under the Act.

11The Registrar submits that the Tribunal made the following errors of law or fact:

1. Interpreting s. 38(1)(b)(iii) of the Act incorrectly;
2. Making incorrect findings of fact, failing to make adverse inferences, failing to consider relevant evidence, and relying on irrelevant facts when making its decision; and
3. Failing to follow principles established in the case law for the consideration of previous criminal convictions.

1. Interpretation of 38(1)(b)(iii)

12Section 38(1)(b)(iii) of the Act provides that:

38(1) An applicant is entitled to a licence or a renewal of a licence by the registrar if, in the registrar’s opinion,

(b) the applicant is a corporation and,

(iii) the past and present conduct of its officers and directors, of all interested person in respect of its officers and directors and of all interested person in respect of the corporation affords reasonable ground for belief that its business will be carried on in accordance with the law and with integrity and honesty

13In its decision at para. 6, the Tribunal states that the issue to be decided with respect to this section was “whether the past conduct of Subramaniam affords reasonable grounds to believe that the appellant will carry on business in accordance with law and with integrity and honesty”.

14The Registrar’s position on its request for reconsideration is that the Tribunal erred in law in interpreting s. 38(1)(b)(iii) as it should be interpreted to mean, not that the applicant is entitled to a licence if there is reason for belief that its business will be carried on in accordance with the law and with integrity and honesty, but that the applicant is entitled to a licence unless there is reason for belief that its business will not be carried on in accordance with the law and with integrity and honesty.

15In support of its position, the Registrar makes four arguments:

1. It says that it was the intention of the Legislature when it amended the Act, to improve consumer protection and to make it more difficult for builders to qualify for licensing.
2. It says that the language in sections surrounding s. 38(1)(b)(iii) indicates that the Legislature intended that this section be easier for the Registrar to establish, in order to deny a licence, than the parallel section in the previous statute.
3. It argues that previous Tribunal decisions with respect to the Act, the previous statute, and other licencing statutes, have determined that the Registrar only must prove that there is reason for belief that the appellant’s business will not be carried on in accordance with the law and with integrity and honesty.
4. It says that the Tribunal should have interpreted s. 38(1)(b)(iii) as it was framed in the Case Conference Report and Order (“CCRO”) and in the Registrar’s submissions at the hearing.

Intention of the Legislature

16The Registrar states that, in 2015 the Government of Ontario initiated a review of the Ontario New Home Warranties Program Act (“ONHWPA”), which is the Act’s predecessor legislation. The Registrar argues that the review, conducted by the Honourable J. Douglas Cunningham Q.C., and subsequent statements made by various government ministers who advocated on behalf of the Act in the Legislature, emphasized that this is consumer protection legislation, and that the intention of the Act is to improve consumer protection and strengthen the regulation of new home builders and vendors.

17The Registrar argues that the legislative changes, which are several, all show a clear intention of increasing the protection of the public, emphasizing the Registrar’s discretion, and requiring deference to the Registrar’s opinion. It says that, in that context, the Tribunal should interpret the words of the Act – “if…the past and present conduct… affords reasonable grounds for belief that its business will be carried on…” as “except where…the past and present conduct… affords reasonable grounds for belief that its business will not be carried on…”.

18According to the Registrar, the Tribunal’s interpretation of s. 38(1)(b)(iii) makes it easier for builders and vendors to obtain a licence and harder for the Registrar to deny a licence than it was under s. 7(1)(c)(ii) of the ONHWPA, which provides that an applicant would be disentitled to a licence if the past conduct of its officers or directors affords reasonable grounds for belief that its undertakings will not be carried on in accordance with law and with integrity and honesty.

19I do not accept the Registrar’s position. The starting point in the interpretation of a statute is to examine the ordinary meaning of the words being interpreted.¹ In my view, the words of the Act are not ambiguous. They set out a test for entitlement which is, in many respects, different that the test set out in the ONHWPA. In effect, the Registrar says that the words “…reasonable grounds for belief that its business will be carried on…” should be interpreted to mean “…reasonable grounds for belief that its business will not be carried on…” (emphasis added). In my view, it is not open to the Tribunal to interpret the Act in a manner that has the effect of re-writing the Act in the way that the Registrar argues it should, and I see no error in the manner in which the Tribunal interpreted the Act in its decision.

20Further, I do not accept the Registrar’s position that the Tribunal’s interpretation of the Act makes it easier for builders and vendors to obtain a licence than under the ONHWPA. As the Registrar points out, there are several changes to the ONHWPA made in the Act. It is not reasonable to say that the Act makes it easier to get a licence by simply comparing one paragraph in one section of the Act to one paragraph in one section of the ONHWPA. As the Registrar points out, several paragraphs were added to the Act which appear to make it harder for an applicant to quality for licensing and it would be misleading to examine each paragraph in isolation as the Registrar suggests.

21Finally, even if one were to compare the two sections in isolation, it is not clear that requiring the Registrar to satisfy the onus described in s. 38(1)(b)(iii) of the Act as set out by the Tribunal’s decision would be more difficult than under s. 7(1)(c)(ii) of the ONHWPA. On a plain reading of both sections, it clear that the two statutes are different. Section 38(1)(b)(iii) the Act directs the Registrar to consider the past and present conduct of the applicant, its officers and directors, and all interested persons in respect of its officers and directors, whereas s. 7(1)(c)(ii) of the ONNHWPA directs the Registrar to review only the past conduct of the applicant’s officers and directors. Section 38(1)(b)(iii) of the Act directs the Registrar to consider whether the business will be carried on in accordance with the law and with integrity and honesty while s. 7(1)(c)(ii) of the ONHWPA directs the Registrar to consider whether the applicant’s undertakings will not be carried on in accordance with law and with integrity and honesty.

22I agree with the Registrar that the Act is consumer protection legislation. However, the Legislature sets out the manner for assessing how consumer protection is to be met by the provisions that are enacted. The Tribunal in paragraph 27 and 28 of its decision acknowledge the consumer protection nature of the Act and the importance to consumers of that purpose.

23I would also add that the Registrar is incorrect with respect to the test it alleges results from the Tribunal’s decision. The Registrar states that, in order to refuse to grant a licence, the Registrar would need to prove that there are no reasonable grounds to believe an applicant would carry out its obligations as required. That is not true. First, the Tribunal specifically states in paragraphs 43 and 44 of its decision that, pursuant to s. 38(1)(g) of the Act, an applicant would be disentitled to a licence if it is proven on a balance of probabilities that the applicant would not carry on business in accordance with the law and with integrity and honesty. To be clear, the decision does not apply a balance of probabilities standard with respect to s. 38(1)(b)(iii) but to the analysis respecting s. 38(1)(g) which does not contain the “reason for belief” language.

24Moreover, in order to prove that an applicant is not entitled to a licence under s. 38(1)(b)(iii), the Registrar would have to show that the past and present conduct does not afford reasonable grounds for belief that the business will be conducted in accordance with the law and with honesty and integrity. That is different than saying that the Registrar needs to show “no reasonable grounds to believe” in order to find that the applicant is not entitled as the Registrar suggests. The Registrar’s argument implies that the determination would have to be made by examining the past and present conduct in isolation – ie. determining whether there is any, isolated, past conduct which would provide a reason for belief the applicant will act as required. In my view, that is not what is required by the section. The question to be determined is whether a review of all of the past and present conduct, when considered as a whole, affords reasonable grounds for belief that the business will be carried on as required.

The surrounding language

25The Registrar takes the position that, since the language in the provisions surrounding s. 38(1)(b)(iii) have the effect of making it easier for the Registrar to prove disentitlement to a licence, s. 38(1)(b)(iii) should likewise be interpreted so that it is easier for the Registrar to prove disentitlement. I do not accept the Registrar’s position. The language of the section under consideration is unambiguous. It states that the applicant is entitled to a licence if there is reason for belief that it will carry on business in accordance with the law and with integrity and honesty. There is nothing in the surrounding sections of the Act which suggest the Registrar’s interpretation should be given to that section.

Previous Tribunal decisions

26The Registrar argues that the Tribunal interpreted the ONHWPA, as well as other licencing statutes, in the way that it says s. 38(1)(b)(iii) ought to be interpreted. That is to say, since the provisions in the ONHWPA and other licencing statutes state that an applicant is entitled to a licence, or registration, unless there is reason for belief that it will not carry on business in accordance with law or with integrity and honesty, the Act should be interpreted in the same way.

27I do not accept the Registrar’s position. The ONHWPA and other licencing statutes were interpreted in the manner they were because of the way they were drafted by the Legislature. The Act is worded differently and so the interpretation of those other licencing statutes has limited application to the interpretation of the Act.

28The only Tribunal decision which the Registrar refers to which refers the wording contained in the Act is in 1957922 Ontario Ltd. v. Registrar, New Nome Construction Licencing Act, 2017, 2022 CanLii 49929 (ON LAT) (“1957922 Ontario Ltd.”). That case was heard in July 2021, about five months after the Act came into effect. The Tribunal found, at paragraph 247, that “the past conduct of the Appellant’s officer and director affords reasonable grounds to believe that the Appellant’s undertakings will not be carried on in accordance with law and with integrity and honesty.” The Tribunal makes the same finding at paragraphs 11 and 242 of its decision. So, although the Tribunal in 1957922 Ontario Ltd. mentions the wording as it is contained in the Act, its findings are set out using the wording in the ONHWPA.

29In any event, I am not bound by the Tribunal’s decision in 1957922 Ontario Ltd. and, to the extent that it is relevant to the issues in this appeal, I respectfully find that it incorrectly states the test for entitlement under s. 38(1)(b)(iii) of the Act.

30The Registrar argues that “reasonable grounds for belief” is a lower standard than balance of probabilities. The Registrar says that the use of that wording in s. 38(1)(b)(iii) implies that the standard of proving disentitlement to a licence is lower than the balance of probabilities standard. The Tribunal does not apply a balance of probabilities standard with respect to the s. 38(1)(b)(iii). It applies the reasonable grounds for belief standard. However, the section itself says that the issue that must be shown on a “reasonable grounds for belief” standard is whether the applicant will carry on business in accordance with the law and with integrity and honest, not whether the applicant will not carry on business in accordance with the law and with integrity and honesty (emphasis added). As stated above, this does not mean that the applicant is entitled to a licence if there is any part of its past conduct which might afford reasonable grounds for belief that it will act as required. It requires a determination of whether the past conduct, as a whole, affords reasonable grounds for belief that the applicant will carry on business as required.

Framing the issue as per Case Conference Report and Order (“CCRO”) and as set out by Registrar

31The NOP sets out the allegations made by the Registrar. The NOP states, among other things, that the test under s. 38(1)(b)(iii) is whether the applicant can reasonably be expected to carry on business in accordance with the law and integrity and honesty. That is the test which was applied by the Tribunal and to which the Registrar now objects.

32While the CCRO frames the issue to be determined as whether there are reasonable grounds to believe that the appellant would not act in accordance with the law or with integrity, honesty or in the public interest, that statement is made in the overview portion of the CCRO and is not set out as an Order of the Tribunal. I do not accept that the words the Tribunal uses in the overview section of a CCRO, or in an Order for that matter, can take precedence over the clear words of the statute and I do not accept that the Registrar was misled as to the test in the Act given that it framed the issue correctly in the NOP.

33The Registrar argues that, because it argued that the issue should be framed as is argued above, it is unfair that the Tribunal determined that a different interpretation should be used without providing the Registrar an opportunity to respond. I do not accept the Registrar’s position. First, as noted above, the Registrar cited the correct test in its NOP and cannot now claim to have been taken by surprise. The fact that it elected to argue that a different standard applied when it got to the hearing does not support the Registrar’s position in my view.

34Second, the Registrar included in its submissions at the hearing, substantially the same argument, and submitted the same evidence as to the legislative history of the Act, that it is now presenting in support of its interpretation of s. 38(1)(b)(iii). I do not accept that the Registrar was not aware that the interpretation of that section was an issue, or that it failed to make necessary submissions at the hearing.

Conclusion regarding the alleged errors in the interpretation of s. 38(1)(b)(iii)

35I find that the Registrar has failed to show that the Tribunal made an error of law in its interpretation of s. 38(1)(b)(iii) of the Act such that the Tribunal would likely have reached a different result had the error not been made.

2. Errors of fact

36The Registrar says that the Tribunal erred with respect to the following findings of fact.

37The Registrar says that, because the appellant did not present documentation to support his evidence that he had been employed for more than ten years earning good income, the Tribunal should have attributed only limited weight to his testimony. However, the Registrar did not challenge the appellant’s evidence in this regard at the hearing and, in fact, submitted evidence itself which supported this evidence including tax returns and a credit check it performed. The Registrar has presented no evidence in its request for reconsideration which would support a different finding by the Tribunal and has not suggested that there is such evidence.

38The Registrar says that the Tribunal’s finding that no complaints had been filed with Tarion or HCRA against the appellant since its registration in 2017 is irrelevant since the appellant did not build any homes during that time. Whether this finding is irrelevant or not, there is no suggestion that, without this finding the Tribunal would have reached a different conclusion.

39The Registrar states that, the appellant did not call witnesses in support of Subramaniam’s character and the Tribunal did not reference that fact. The Registrar does not indicate in its submissions the conclusion it would like the Tribunal to draw from that. The Tribunal accepted the appellant’s evidence with respect to the changes that he made to his life since his criminal behaviour took place and the Registrar did not present evidence which satisfied the Tribunal that the appellant was not being truthful in that regard. I am not satisfied that the Tribunal should have made an adverse inference, assuming that is what is being suggested by the Registrar, and I see no error in the factual findings made by the Tribunal in this regard.

40The Registrar states that, in its decision, the Tribunal noted that the appellant worked for his wife. The Registrar does not suggest in its submission that this was an error of fact.

41The Registrar says that the state of an individual’s finances is of no, or limited relevance, as to whether the individual will act with integrity or honesty. The Registrar has not presented evidence in its request for reconsideration that the Tribunal’s factual findings in this regard were in error. The Registrar suggests that the ability to qualify for a loan or that he might have a good credit rating is irrelevant to the determination of his honesty or integrity. I disagree. A person’s history of honouring their commitments, including their financial commitments, is a relevant consideration with respect to that person’s honesty and integrity. I am not satisfied that the Tribunal erred when it considered this in its decision.

42The Registrar says that the fact that the appellant has become a Canadian citizen is irrelevant. The Registrar does not suggest that the Tribunal’s decision would have been different had this factor not been considered.

43In summary, I am not satisfied that the Tribunal made errors of fact or that the Tribunal would have reached a different result had the error not been made as is alleged by the Registrar. Indeed, I find that the Registrar is requesting the Tribunal to re-weigh the evidence that was before it, which is not a valid purpose for requesting reconsideration.

3. Failing to follow the principles established by case law with respect to the consideration of criminal convictions

44The Registrar, in its submissions, cites five principles which it derives from previous cases and which it says apply to the effect previous convictions should have on an applicant’s subsequent entitlement to licensure. These principles are listed by the Registrar as follows:

i) A criminal conviction should not be relitigated at the Tribunal; ii) Criminal convictions are highly relevant and should be accepted on their face; iii) The controlling principle is the promotion of integrity and honesty; iv) A second chance does not mean entitlement to a licence; and v) Multiple sets of convictions establish a pattern of behaviour.

45The Registrar in its submissions does not allege that the Tribunal did not appropriately apply these principles in its decision. The Tribunal’s decision at para. 38 makes it clear that there was no attempt by the appellant to re-litigate his convictions. The Tribunal found at para. 32 of its decision that the convictions were serious and relevant to the determination of whether there is reason to believe the appellant’s business would be carried on in accordance with law and honesty and integrity. The Tribunal does not suggest that the appellant should be given a second chance or that a second chance might mean that the appellant is entitled to a licence.

46In its decision, the Tribunal reviewed the evidence, including the convictions, the length of time since those convictions, and the appellant’s conduct since then, and concluded that there were reasonable grounds for belief that the appellant’s business will be carried on in accordance with the law and with integrity and honesty. I am not satisfied that there was an error in law with respect to the principles it applied to the consideration of Subramaniam’s criminal convictions such that the Tribunal would have reached a different result had the error not been made.

E. ORDER

47Pursuant to Rule 18.4(b) of the Tribunal’s rules, I confirm the decision of the Tribunal released September 6, 2022.

LICENCE APPEAL TRIBUNAL

_________________________

Colin Osterberg, Member

Footnotes

1. 1Blue Star Trailer Rentals Inc. v. 407 ETR Concession Company Limited, 2008 ONCA 561, para. 24