Josip Kolar and Kolar Auto Body Ltd. v. Director of Vehicle Inspection Standards, 2022 CanLII 20238

Licence Appeal Tribunal

Date: 2022-03-11

Appeal from a Notice of Proposal under sections 91 and 93 of the Highway Traffic Act, R.S.O. 1990, c. H.8, to Refuse to Renew a Motor Vehicle Inspection Licence and to Revoke a Licence as a Motor Vehicle Inspection Mechanic.

Between:

Josip Kolar and Kolar Auto Body Ltd. Appellants

and

Director of Vehicle Inspection Standards Respondent

DECISION AND ORDER

ADJUDICATOR: Stephen Scharbach, Member

APPEARANCES:

For the Appellants: no-one appearing For the Respondent: R. DeFaria, Counsel

Held by videoconference: February 2, 2022

Overview

1Josip Kolar (“Kolar”) is registered under the Highway Traffic Act (“Act”) as a motor vehicle inspection mechanic.

2His business, Kolar Auto Body Ltd. (“Kolar Ltd.”), is licenced under the Act as a Type 6 motor vehicle inspection station. That licence allows it to inspect salvage motor vehicles and, where appropriate, issue structural inspection certificates (“SICs”).

3The Director of Vehicle Inspection Standards (“Director”) has issued a proposal to revoke Mr. Kolar’s registration and to refuse to renew Kolar Ltd.’s licence.

4The proposal is mainly based on allegations that Kolar Ltd. issued SICs bearing Mr. Kolar’s false signature as the inspecting mechanic. In addition, contrary to regulatory requirements, it failed to collect and submit to the Director information designed to allow for verification that the vehicle had been repaired and was structurally sound.

5The appellants requested a hearing before this Tribunal. After a pre-hearing case conference in October 2021, the parties agreed to a 3 day hearing to start on February 2, 2022 via videoconference.

6The hearing started on that day, however the appellants did not attend and the hearing proceeded in their absence.

7After considering the evidence presented on behalf of the Director, I conclude that the Director’s proposal should be carried out.

Appellants Did Not Attend in the Hearing

8At the outset of the hearing on February 2, 2022, the Director’s counsel and witness were present and prepared to proceed. However, the appellants were not present. Tribunal staff made attempts to reach them via telephone but received no reply.

9I am satisfied that the appellants received notice of the hearing. A notice of videoconference hearing was sent to the appellants and it contains the following statement:

If you do not attend the hearing, the Tribunal may make a decision in your absence and you will not be entitled to any further notice in the proceeding.

10That statement reflects the Tribunal’s power under the Statutory Powers Procedure Act to proceed with a hearing in the absence of a party where notice of the hearing has been given and the party does not attend¹.

11I note that the appellants agreed to the hearing date at a pre-hearing conference held on October 13, 2021. At that point, they were represented by a lawyer but he withdrew as the appellants’ counsel in December 2021.

12I am informed that the appellants provided no disclosure to the Director and emails from the Director’s counsel requesting disclosure went unanswered. Neither the Tribunal nor the Director’s counsel have received any recent communication from the appellants. They have not requested an adjournment.

13It appears that the appellants have abandoned their appeal. However, the Director requested that the hearing proceed in the appellants’ absence. A written Tribunal decision setting out the facts and the Tribunal’s conclusions will be relevant if the appellants or principals apply for registration or licencing in the future.

14I agreed with the Director’s request and the hearing proceeded in the appellants’ absence.

Legal Background

15Mr. Kolar’s registration as a motor vehicle inspection mechanic and Kolar’s Ltd.’s licence as a Type 6 vehicle inspection station, allow Kolar Ltd. to issue SICs in respect of salvage vehicles that have been repaired.

16The SIC is meant to certify to the public, including potential purchasers and owners of the vehicle, that the vehicle has been structurally inspected in accordance with the requirements of the Act and regulations and that the items inspected meet the prescribed standards. In other words, the vehicle is structurally sound to operate.

17Sections 91 and 93 of the Act provide that the Director may revoke or refuse to renew an inspection mechanic’s registration and an inspection station’s licence in certain circumstances.

18With respect to Kolar Ltd.’s inspection station licence, the Act provides that the Director may refuse to renew a licence on several grounds including the following ones which I consider relevant here:

• The licencee has made a false statement in any safety standards certificate or in any report or information required to be furnished under the Act or regulations².
• The licensee does not comply with the Act or regulations³.

19Similarly, the Act provides that the Director may revoke an inspection mechanic registration on certain grounds and they include the following ones which I consider relevant here:

• The registrant has made a false statement in a safety standards certificate, or any report or information required to be furnished under the Act or regulations⁴.
• The registrant does not comply with the Act or regulations⁵.

20Before the Director may revoke a licence or refuse to renew a registration, section 95(1) of the Act requires the Director to give written notice of his proposed action and inform the licencee/registrant of their right to request a hearing before this Tribunal.

21If requested, the Tribunal shall hold a hearing where the onus is on the Director to prove the facts that support the proposal on balance of probabilities.

22Section 95(5) of the Act provides that, after a hearing, the Tribunal may direct the Director to carry out the proposal, refrain from carrying out the proposal and to take such action that the Tribunal considers the Director ought to take in accordance with the Act and regulations.

23Ontario Regulation 601 made under the Highway Traffic Act (“Regulation”) is relevant in this case. It applies to motor vehicle inspection stations that hold a Type 6 licence and issue SICs for structurally repaired vehicles.

24The Regulation requires that licensees collect, maintain, and send to the Director certain prescribed information and documents with respect to each SIC that it issues. That information is meant to enable the Director and the public to confirm that the vehicle has been structurally repaired in accordance with prescribed standards. The required information includes:

• a list of the major components used in rebuilding the vehicle,
• date of purchase and invoice for major components,
• photographs showing the damaged vehicle before being rebuilt and the vehicle in the frame alignment bench,
• relevant excerpts from the manuals used to source the manufacturer’s specifications and dimensions, and
• measurements taken of the vehicle after repair to ensure that they are within the tolerance range of the manufacturer’s specifications.

Allegations and Findings

25According to the evidence, Mr. Kolar was Kolar Ltd.’s registered vehicle inspection mechanic and the only person authorised to structurally inspect and sign SICs issued by Kolar Ltd.

26The Director alleges that:

• in 14 cases Kolar Ltd. issued SICs for vehicles not inspected by Mr. Kolar and containing his false signature.
• contrary to the Regulation, in 18 cases Kolar Ltd. issued SICs without collecting or providing to the Director the information necessary to verify that the vehicles had been structurally inspected.

27The allegations originated with an inspection of Kolar Ltd. by MTO inspector Glen Dodwell in or around September, 2020. Mr. Dodwell testified at this hearing.

28The inspection was initiated after an inquiry from an insurance investigator. Mr. Dodwell attended at Kolar Ltd.’s shop, interviewed Josip Kolar and staff, and reviewed business records, including the files for 18 vehicles for which Kolar Ltd. had issued an SIC.

29In all 18 cases, Kolar Ltd failed to submit any of the information or documents required by the Regulation – a violation in each case of s.10.1(1) of the Regulation which requires the information be submitted within 7 days of issuance of a SIC.

30Mr. Dodwell requested that Kolar Ltd. collect and provide to him the information and documents required the Regulation. Eventually, after delay and multiple visits, Kolar Ltd provided the information and documents that it could gather and Mr. Dodwell’s analysis of them revealed additional concerns.

31Firstly, in all cases required information was missing. Most significantly, none of the files contained the measurements required to be taken after repair to verify that structural components had been restored to prescribed standards. Without that information, the integrity of the certificate is questionable. I conclude that Kolar Ltd contravened s. 10(1) of the Regulation by failing to collect and keep the information required under s.10.1.

32Secondly, according to the evidence, Mr. Kolar was the only employee entitled (through his inspection mechanic registration) to conduct structural inspections and to sign SICs on behalf of Kolar Ltd. However, four of the certificates issued by Kolar Ltd. were signed by an unregistered technician with a licence that did not permit structural inspection.

33Thirdly, 14 of the 18 SICs bore the false signature of Mr. Kolar. Mr. Noor Yalda - Kolar Ltd’s manager and also an officer and director Kolar Ltd. – falsely claimed to Mr. Dodwell that in each case the inspections were completed by Mr. Kolar and Mr. Kolar signed the SICs as inspecting mechanic.

34However, Mr. Dodwell personally interviewed Mr. Kolar. Mr. Kolar stated he was staying away from the business because of COVID concerns. He admitted that he did not sign the SICs and that he did not conduct the structural inspections.

35Based on Mr. Dodwell’s interview of Mr. Kolar, I find that Mr. Kolar was aware of and acquiesced in his signature being used to give the false impression that he - the only qualified inspection mechanic at Kolar Ltd. – had conducted the structural inspections.

36Under s. 99(2) of the Act it is an offence to make a false statement in a safety standards certificate. I conclude that in this case Kolar Ltd and Josip Kolar caused SICs to be issued with Mr. Kolar’s false signature on them. The inclusion of his signature was meant to convey the false impression that Mr. Kolar, the only person qualified to conduct structural inspections at Kolar Ltd., had completed the inspections. In my view, Kolar Ltd. and Mr. Kolar thereby made false statements on the SICs in contravention of the Act.

37Finally, I also conclude that Kolar Ltd. breached the Act by failing to notify the MTO within 15 days that Mr. Yalda had become an officer and director. According to s. 91(7) of the Act, a licencee is required to notify the Director of any change in the officers or directors of the corporation within 15 days.

38The required notice informing the MTO of Mr. Yalda’s status was submitted to the MTO on March 18, 2021, over three years late.

Analysis and Decision

39Based on my findings summarised above, I conclude that the public interest requires that renewal of Kolar Ltd’s licence as a vehicle inspection station be refused, and Mr. Kolar’s registration as a vehicle inspection mechanic be revoked.

40With respect to Kolar Ltd., I find that it issued falsified SICs in 14 cases by inserting Mr. Kolar’s phony signature on them to give the false impression that Mr. Kolar had inspected the vehicles. I my view, that alone is a ground for refusing to renew Kolar Ltd.’s licence.

41Another ground for refusing to renew is lack of compliance with the Act and regulations and I find that Kolar Ltd. breached the Act and regulation in significant ways.

42It contravened s. 91(7) of the Act by failing to inform the Director that Mr. Yalda had become an officer and director.

43It failed to comply with s. 10.1 of the Regulation by issuing SICs without submitting to the Director the information required by the Regulation.

44It also failed to comply with the Regulation by failing to collect and maintain the information necessary to verify that each vehicle for which it issued a SIC had been repaired to prescribed standards. As a result, structural repair cannot be verified leaving open the possibility that the vehicles for which Kolar Ltd. issued SICs were not in fact structurally sound. Kolar Ltd.’s conduct thereby placed the public potentially at risk.

45I note that in 2016 Kolar Ltd. was convicted of four offences under the Act for similar conduct – issuing SICs and failing to send the required information to the Director.

46It chose not to participate in the hearing and there is no basis upon which I could conclude that conditions attached to its licence will adequately protect the public. I agree with the Registrar that Kolar’s Ltd.’s application to renew its licence should be refused.

47I also conclude that Mr. Kolar’s registration as a structural inspection mechanic, should be revoked. I find that Mr. Kolar either participated in or acquiesced in Kolar Ltd. issuing SICs with his signature on them as the inspecting mechanic although he did not conduct the inspections. I conclude that he thereby participated in making false statements on several SICs in contravention of the Act.

48Mr. Kolar’s conduct in that regard also potentially endangered the public. He participated in conduct that resulted in SICs being issued under his signature for vehicles he did not inspect and for which no information is available to determine whether they are actually structurally sound.

49Mr. Kolar did not participate in the hearing and I have no basis upon which I could conclude that conditions attached to his registration would adequately protect the public. In my opinion, the public interest requires revocation of Mr. Kolar’s registration.

Motion for Costs

50Counsel for the Director requests that the Tribunal make a costs order against the appellants. Such an order can be made by the Tribunal under Rule 19.1 of the Tribunal’s Common Rules of Practice and Procedure (October 2, 2017), (“Rules”) in any case where a party “has acted unreasonably, frivolously, vexatiously, or in bad faith”. Under Rule 19.6, the amount of any costs order shall not exceed $1,000 for each full day of attendance.

51In this case, I agree with the Director that the appellants have acted unreasonably and I order that the appellants pay costs in the amount of $1,000.

52Although the appellants requested a hearing, they did not comply with the Tribunal’s pre-hearing order to provide disclosure. They stopped communicating with the Director or the Tribunal in the weeks leading up the hearing. The appellants seem to have abandoned their appeal but did not inform the Director or the Tribunal of their intentions. They simply chose not to attend the hearing. As a result, public resources were spent to hold a hearing that may have been unnecessary. In my view the appellants have acted unreasonably and this is an appropriate case for a costs order.

Order

53Pursuant to s. 95(4) of the Highway Traffic Act I direct the Director of Motor Vehicle Inspection Standards to:

(a) carry out the proposal dated May 17, 2021 to refuse to renew the motor vehicle inspection station licence of Kolar Auto Body Ltd.

(b) carry out the proposal dated May 17, 2021 to revoke the motor vehicle inspection station mechanic licence of Josip Kolar.

54Pursuant to Rule 19.1 I order that Kolar Auto Body Ltd and Josip Kolar shall pay to the Director of Vehicle Inspection Standards costs in the amount of $1,000.

Footnotes

1. 1Statutory Powers Procedure Act, R.S.O. 1990, c. S. 22, s. 7
2. 2The Act, s. 91(8)(a)
3. 3The Act, s. 91(8)(e)
4. 4The Act, s. 93(a)
5. 5The Act, s. 93(c)