Appeal from a Notice of Proposal to Revoke a Licence and to Refuse a Licence under the Cannabis Licence Act, 2018, S.O. 2018, c. 12, Sched 2
Between:
T-Dot Auto Collision Inc. o/a Cannaverse and Yalini Manoharan
Appellants
and
Registrar under the Alcohol and Gaming Commission of Ontario Act, 2019
Respondent
DECISION AND ORDER
PANEL: Colin Osterberg, Member Laura Goulet, Member
APPEARANCES:
For the Appellants: Marie Henein and Jennifer Brevorka, Counsel
For the Respondent: Brendan van Niejenhuis and Karen Bernofsky, Counsel
Heard by Videoconference: May 16-19, 2022
REASONS FOR DECISION AND ORDER
A. Overview
1T-Dot Auto Collision Inc. (“T-Dot”) is a corporation which is licenced as a Cannabis Retail Operator (“CRO”) under the Cannabis Licence Act, 2018, S.O. 2018, c. 12, Sched. 2 (the “Act”) and Regulations. T-Dot intends to operate 14 cannabis retail stores in Ontario under the name Cannaverse. Yalini Manoharan (“Manoharan”) is the sole officer, director, and shareholder of T-Dot. Manoharan has applied for a Cannabis Retail Manager (“CRM”) licence under the Act. Mano Subramanian (“Subramanian”) is Manoharan’s spouse, and it is the position of the Registrar that he is a “person interested” in T-Dot under the Act.
2Pursuant to a Notice of Proposal dated October 26, 2021 (the “NOP”), the Registrar proposed to revoke the licence of T-Dot as a CRO. The Registrar amended the NOP on February 28, 2022 to include a proposal to refuse to issue a CRM licence to Manoharan. The NOP was amended twice more, narrowing the grounds on which the revocation and refusal are based.
3The Registrar proposes to revoke T-Dot’s licence on the basis that there are reasonable grounds to believe that T-Dot will not be financially responsible and will not carry on business as a CRO in accordance with the law, or with integrity, honesty or in the public interest, having regard to the past or present conduct of Manoharan and/or Subramanian.
4The Registrar proposes to refuse to issue a licence to Manoharan on the grounds that there are reasonable grounds to believe that Manoharan will not, in acting as a CRM, act in accordance with the law, or with integrity, honesty or in the public interest, having regard to her past or present conduct.
5The Registrar also alleges that false statements made by Manoharan make her and T-Dot ineligible for licencing under the Act.
B. ISSUES and results
6The first issue to be decided is whether the Registrar has shown that Subramanian is an interested person with respect to T-Dot or Manoharan. If not, then Subramanian’s past and present conduct is not relevant to T-Dot’s licencing as a CRO.
7For the reasons set out below, we are not satisfied that Subramanian is an interested person with respect to T-Dot or Manoharan as that term is defined in the Act. Given that finding, the Tribunal need not make findings with respect to Subramanian’s past conduct in relation to T-Dot’s eligibility for licencing.
8The second issue to be decided is whether there are reasonable grounds to believe that Manoharan will not act in accordance with the law, or with integrity, honesty or in the public interest, having regard to her past or present conduct. If so, then she is ineligible for licencing as a CRM and T-Dot is ineligible for licencing as a CRO. We find that the evidence presented at the hearing fails to establish those grounds.
9The third issue to be determined is whether there are reasonable grounds to believe that T-Dot will not be financially responsible in the conduct of its cannabis retail business, having regard to its financial history or the financial history of Manoharan. We find that the evidence presented at the hearing fails to establish those grounds.
10The fourth issue is whether the Registrar has shown that T-Dot, or Manoharan, made a false statement or provided false information in their application for licencing. We are not satisfied that either T-Dot or Manoharan made a false statement or provided false information.
11In its submissions, the Registrar stated that it is not satisfied that T-Dot would exercise sufficient control over its cannabis retail business and is ineligible for licencing pursuant to s. 3(4)5 of the Act; however, it led no evidence with respect to this issue and did not explain how it came to this conclusion. We find that the Registrar has failed to prove this allegation.
12For the reasons that follow, we substitute our opinion for that of the Registrar, set aside the NOP, and direct the Registrar to impose a condition on T-Dot’s CRO licence and to issue a CRM licence to Manoharan without conditions.
C. LAW
13Under s. 3(4)1 of the Act, an applicant is not eligible to be issued a CRO licence if there are reasonable grounds to believe that the applicant will not be financially responsible in the conduct of the applicant’s cannabis retail business, having regard to the financial history of any of the persons referred to in subsection 3(5).
14Under s. 3(4)2 of the Act, an applicant is not eligible to be issued a CRO licence if there are reasonable grounds to believe that the applicant will not carry on business in accordance with the law, or with integrity, honesty or in the public interest, having regard to the past or present conduct of any of the persons referred to in subsection 3(5).
15The persons referred to in subsection 3(5) include:
(a) the applicant;
(b) persons interested in the applicant; and
(c) if the applicant is a corporation, the directors, officers or shareholders of the applicant and persons interested in those directors, officers, or shareholders.
16Section 1(2) of the Act provides that a person is interested in another person if the first person:
(a) has, or may have in the opinion of the Registrar based on reasonable grounds, a beneficial interest of any kind, either directly or indirectly, in the other person’s business, including but not limited to a holder, directly or indirectly, of shares or other securities;
(b) exercises, or may exercise in the opinion of the Registrar based on reasonable grounds, direct or indirect control over the other person’s business; or
(c) has provided, or may have provided in the opinion of the Registrar based on reasonable grounds, direct or indirect financing to the other person’s business.
17Under s. 3(4)5 of the Act, an applicant is not eligible to be issued a CRO licence if the Registrar is not satisfied that the applicant will exercise sufficient control, either directly or indirectly, over the applicant’s cannabis retail business.
18Under s. 3(4)6 of the Act, an applicant is not eligible to be issued a CRO licence if the applicant or an employee or agent of the applicant makes a false statement or provides false information in the application.
19Under s. 5(4)1 of the Act, an applicant is not eligible to be issued a CRM licence if there are reasonable grounds to believe that the applicant will not, in acting as a CRM, act in accordance with the law, or with integrity, honesty or in the public interest, having regard to his or her past or present conduct.
20Under s. 5(4)4 of the Act, an applicant is not eligible to be issued a CRM licence if the applicant makes a false statement or provides false information in the application.
21Sections 3(7) and 5(6) of the Act provide that the Registrar shall issue the appropriate licence if the applicant has met the application requirements and is not ineligible, or it shall issue a proposal to refuse the application. Section 11(1)(b) of the Act provides that the Registrar may propose to revoke a licence on any ground that would disentitle the holder of the issued licence if the holder was an applicant.
22If the Registrar proposes to revoke or refuse a licence, the licence holder or applicant may request a hearing by the Tribunal under s. 14(2). After a hearing, the Tribunal may confirm or set aside the proposal and direct the Registrar to take any action it considers appropriate to give effect to the purposes of the Act. The Tribunal may attach such terms to its order, or such conditions to the licence that is the subject of the hearing as it considers appropriate.
23Where the Registrar alleges that the appellant is ineligible for licensing on the basis of one of the grounds listed in s. 3(4) or s. 5(4), the onus is on the Registrar to satisfy the Tribunal that the ground(s) relied upon apply. The facts alleged as the basis for such a finding must be proven on a balance of probabilities.
24For the purposes of grounds which require proof of “reasonable grounds to believe”, the Ontario Court of Appeal in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc., 2013 ONCA 157 described the standard of proof in the following terms:
The standard of proof….is that of “reasonable grounds for belief”. As applied to this case, s. 6(2)(d) of the Act required the Registrar simply to show that Mr. Barletta’s past or present conduct provides reasonable grounds for belief that he will not carry on business in accordance with law and integrity and honour. The Registrar does not have to go so far as to show that Mr. Barletta’s past or present conduct make it more likely than not that he will not carry on business as required.1
25At the same time, the “reasonable grounds to believe” must be more than “mere suspicion” and will be found to exist “where there is an objective basis for the belief which is based on compelling and credible information.”2 Further, there must be a nexus between the appellant’s past conduct and his ability to conduct business under the Act serving the interests of the public.3
D. pRELIMINARY ISSUE
26April 29, 2022, the Tribunal issued an Order that the public shall not be given access to the Occurrence Report relating to the attempted murder of Manoharan’s husband unless the following identifiers are redacted:
i. Any information that could reveal the identity of the neighbours who spoke with police following the attempted murder;
ii. Any personal information relating to the minor child; and
iii. All birthdates, names, addresses, phone numbers, driver’s licence numbers, licence plate numbers and other like information belonging to non-parties other than police or AGCO employees acting in their official capacity.
27The Tribunal does not state that the Order is time-limited, however paragraph 32 of the Reasons states that the third category of information should be time limited to 30 days after the Tribunal’s decision is released. To be clear, there was no time-limit applied to the Tribunal’s Order with respect to the information described in category i. and ii. either in the Order itself, or in the reasons given for the Order.
28At the commencement of the hearing, the appellants brought a motion requesting;
a. that the previous confidentiality order be continued and not time limited;
b. that the previous order be extended to exclude the public from the portions of the witness evidence that is the subject of the confidentiality order; and
c. that public access be restricted to any information about the residence of the Manoharan and her family.
29The Registrar took no position on the motion.
30We find that the relief requested in paragraph c. is covered in the April 29, 2022 Order. That Order is not time-limited in-so-far as information relating to the minor child is concerned and we find that includes information about the child’s residence, and that of Manoharan and her family. If clarity is required, we hereby order that the public shall not be given access to the Occurrence Report relating to the attempted murder of Manoharan’s husband unless personal information therein regarding the minor child, Manoharan, and Subramanian, including their current residence, is redacted.
31The only information for which the confidentiality was time-limited in the April 29, 2022 Order is various identifying information with respect to non-parties other than police or AGCO employees acting in their official capacity. There was no evidence to suggest that circumstances have changed since the April 29, 2022 Order was made. In making its Order at that time the Tribunal considered the test set out in Sherman Estate v. Donovan, 2021 SCC 25 and concluded that:
making the Occurrence Report public in its entirety would jeopardize the safety of the persons who spoke with police during the investigation and that publishing identifiers regarding Manoharan’s son, witnesses to the attempted murder, and other third parties, poses a serious risk to the administration of justice;
a sealing order is required in order to protect the interests at stake and that a less intrusive order such as a publication ban would not protect those interests; and
the benefits of the order outweigh the detrimental impact of limiting the open court principle since the redacted information consists of peripheral identifiers that do not relate to the merits of the proceedings and do no deprive the public of understanding the allegations and information made against the appellants.
32As stated above, there is no evidence that the circumstances leading to the Tribunal’s findings have changed since the Order was made.
33First, the identifiers and other information were collected in the context of a police investigation into an attempted murder potentially involving members of organized crime. The information contained in the Occurrence Report could be used to identify and find the various individuals referred to therein. DC D’Andrea confirmed at the hearing that the investigation is ongoing and that there have been no arrests to date.
34Second, there was no evidence at the hearing to indicate that access to the identifiers no longer poses a risk to the administration of justice or that a less intrusive order would now be appropriate.
35Third, because the Registrar has abandoned several of the allegations it had made in the appeal, if anything the redacted information is less relevant to the merits of the proceedings than it appeared when the April 29, 2022 Order was made, and its redaction does not deprive the public of understanding the allegations and information made against the appellants.
36For the reasons set out above, we order that:
a. the public shall not be given access to the Occurrence Report relating to the attempted murder of Manoharan’s husband unless personal information therein regarding the minor child, Manoharan, and Subramanian, including their current residence, and any information that could reveal the identity of the neighbours who spoke with police following the attempted murder is redacted; and
b. the public shall not be given access to the parts of the Occurrence Report relating to birthdates, names, addresses, phone numbers, driver’s licence numbers, licence plate numbers and other like information belonging to non-parties other than police or AGCO employees acting in their official capacity.
E. EVIDENCE AND ANALYSIS
Background
37As stated above, T-Dot intends to operate as a CRO under the name “Cannaverse”. From 2011 until December 2021, T-Dot operated an automotive repair business at 1064 Birchmount Road, Scarborough, Ontario. In December 2021, T-Dot sold its assets, and it no longer operates an automotive repair business. T-Dot applied for a CRO licence, and that licence was issued on February 21, 2020.
38Manoharan is an entrepreneur and a businessperson. She studied business for three years at York University and then left school and worked for five years as a customer service representative at a major bank. Since then, in addition to owning and operating T-Dot, Manoharan owned and operated three cinemas, an advertising agency, a movie production company, and a business selling and renting automobiles. She also owns several properties. These enterprises are conducted through corporations of which Manoharan is the sole shareholder.
39Since obtaining its CRO licence, T-Dot has secured locations for its proposed cannabis retail stores and has completed renovation work on those locations to ensure they are compliant with AGCO requirements. Financing for the Cannaverse operation has been secured from RBC by way of a $2.2 million mortgage on property owned by one of Manoharan’s corporations.
40The evidence is that Subramanian also owns several corporations, some of which own real estate and others of which operate businesses. Subramanian attended two years of university toward a business degree and is currently involved in the operation of a construction company.
Issue 1: Is Subramanian an interested person in T-Dot?
41If Subramanian is an “interested person” in T-Dot, then his financial history and past and present conduct must be considered when determining T-Dot’s eligibility for licencing. As noted above, under s. 1(2) of the Act, an interested person includes: (a) a person with a beneficial interest in the other person’s business; (b) a person who exercises control over the other person’s business; or (c) a person who finances the other person’s business.
Beneficial Interest
42It is our view that a person does not have a beneficial interest in the other person’s business simply by virtue of being that other person’s spouse. If the Legislature had wished to include a spouse in the definition of an interested person, it would have done so explicitly. Section 1(2) does not refer to familial relationships in determining whether one person is interested in another person, only to ownership, control, and financial relationships as they relate to the business being operated.
43Further, we consider that the term “beneficial interest” does not mean simply that a person benefits from the operation of a business either through contracting with that business or otherwise. Such a definition would be overly broad and would include an indeterminate number and class of persons who would be “interested” in any given business. At law, a person with a beneficial interest is a person who has a right to share the benefits of a property, even if they are not the legal owner. A person does not have a beneficial interest in another person by virtue of being employed by that other person, leasing property to that other person, or entering contracts with that other person. Those relationships, while presumably beneficial to both parties, do not create a beneficial interest in the business.
44While the evidence shows that Subramanian is married to Manoharan, was employed by T-Dot, and that his corporation was T-Dot’s landlord and owes money to T-Dot, these relationships do not create a beneficial interest in T-Dot under the Act.
45The Registrar called Tom Schmidt to give evidence at the hearing with respect to T-Dot’s finances. Mr. Schmidt is employed by the AGCO and is a CPA/CA and a Certified Forensic Examiner, although he was not qualified as an expert at the hearing. In April 2021, Mr. Schmidt was tasked with conducting a due diligence investigation with respect to T-Dot’s and Manoharan’s finances to ensure that their governance standards were satisfactory and to identify any concerns with respect to their honesty and financial responsibility.
46The Registrar argues that Manoharan, Subramanian, and the corporations they control, operate as a “consolidated” enterprise, for the benefit of both Manoharan and Subramanian as a couple. We do not accept that this has been proven and, even if it had, we do not accept that this means Subramanian has a beneficial interest in T-Dot under the Act.
47First, Mr. Schmidt does not say that Subramanian or the corporations he controls have a legal or beneficial interest in T-Dot. He confirmed Manoharan’s evidence that she is the only person with a financial interest in T-Dot and that Subramanian neither owns nor controls T-Dot.
48Second, Mr. Schmidt did not testify that the businesses owned by Manoharan and Subramanian were being operated as a consolidated enterprise as the Registrar suggests. He says that there were loans between the various corporations owned by Manoharan and Subramanian but none of those loans involved T-Dot.
49Third, Manoharan says that she is the sole owner of T-Dot and that Subramanian has no interest in the business being operated by T-Dot. We find that the evidence presented at the hearing supports that assertion.
50We are not satisfied that Subramanian has a beneficial interest in T-Dot.
Control
51There was little evidence that Subramanian exercises control over T-Dot’s business.
52The Tribunal heard evidence that Subramanian was employed by T-Dot while it operated as an automobile service center, and that his job title was “general manager”. Mr. Schmidt acknowledges that he never asked about Subramanian’s job duties or his decision-making authority with respect to T-Dot. He says that Subramanian did not have signing authority and did not have access to T-Dot’s bank accounts. Further, T-Dot employed another “general manager” who did have actual signing authority. T-Dot also employed Michelle James, a long-time business associate of Manoharan, who was in charge of T-Dot’s day-to-day operations. We are not satisfied that the evidence of Subramanian’s past employment with T-Dot establishes that he exercises control with respect to T-Dot’s business.
53As set out above, the Registrar argues that the operation of Manoharan and Subramanian’s various businesses as a consolidated enterprise leads to the conclusion that Subramanian controls T-Dot either directly or indirectly. We disagree. We have found that no such consolidation has been demonstrated. Even had that been shown, and we accept that Manoharan and Subramanian probably coordinate their business activities to some degree, that does not mean that one controls the other. The evidence at the hearing does not satisfy us that Subramanian exercises control over T-Dot or any of the other corporations owned and operated by Manoharan.
54We accept Manoharan’s evidence that Subramanian does not and will not participate in the Cannaverse operation carried on by T-Dot. Manoharan says that she will continue to control that business herself. The Registrar has not satisfied us that Subramanian exercises control over T-Dot’s business.
Financing
55Mr. Schmidt confirmed Manoharan’s evidence that she is the only person who has money invested in T-Dot. Mr. Schmidt did not say that Subramanian has ever provided financing to T-Dot.
56The Registrar presented evidence that Subramanian is the sole shareholder of a corporation that rents a building to T-Dot. In 2016, the corporation significantly lowered the rent that T-Dot was required to pay. Depending on the circumstances, this could be a form of indirect financing since Subramanian’s corporation may be, in effect, funding a portion of T-Dot’s rent by not charging market rates.
57There was no evidence presented at the hearing to demonstrate the market rates for rent for the building in question. In the circumstances, the submission that this arrangement amounts to financing is somewhat speculative. Moreover, there was no evidence that there was a debt owing by T-Dot to Subramanian as a result of the lower rents being charged. In fact, T-Dot’s financial statements show a significant debt owing by Subramanian to T-Dot which, according to Manoharan, is due to leasehold improvements T-Dot made to the property.
58We are unable to conclude based on the evidence presented at the hearing that lowering T-Dot’s rent in 2016 amounts to financing under the Act.
59As noted above, T-Dot sold all of its assets related to the automobile repair business and is essentially an inactive corporation other than with respect to Cannaverse. The evidence demonstrates that all of the financing for T-Dot’s Cannaverse business has been secured using Manoharan’s personal assets and not Subramanian’s.
60We are not satisfied that Subramanian, or his corporations, have provided direct or indirect financing to T-Dot or to Cannaverse.
Conclusion regarding Subramanian as interested person in T-Dot
61We are not satisfied that Subramanian has a beneficial interest in the T-Dot’s business, that he exercises control over the T-Dot’s business, or that he has financed T-Dot’s business. We conclude that Subramanian is not an interested person in the business of T-Dot as defined by the Act.
Issue 2: Past conduct of Manoharan
62The Registrar alleges that Manoharan’s past and present conduct should render both her and T-Dot ineligible for licencing under the Act. It bases this position on three allegations: 1) that she told David Taylor, an investigator for the AGCO, that her husband was shot in July 2020 due to mistaken identity when that was not true; 2) that she is not being truthful about her involvement in the towing business and Subramanian’s involvement in T-Dot; and 3) that she was subject to disciplinary proceedings by the Ontario Motor Vehicle Industry Council (“OMVIC”) with respect to her motor vehicle sales business.
63In support of its allegations relating to the first two of these issues, the Registrar submitted an Occurrence Report prepared by Detective Constable Nicholas D’Andrea (“DC D’Andrea”) of the Durham Regional Police Service with respect to an incident on July 27, 2020, in which Subramanian was shot while standing in his driveway. In particular, the Registrar referred the Tribunal to summaries of interviews DC D’Andrea conducted of Manoharan and Subramanian after the shooting which the Registrar alleges are materially different from statements they made to AGCO investigators in support of their applications for licencing.
64The appellants objected to the admission of the Occurrence Report on several bases including that the contents of that report are irrelevant, hearsay, unreliable, and that the Occurrence Report is not the best evidence available with respect to its contents.
65Section 15 of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22 allows the Tribunal to admit any oral testimony or document into evidence, subject to limited exceptions, if it is relevant to the subject matter of the proceeding.
66Evidence with respect to statements made to the police that are inconsistent with later statements made to an AGCO investigator with respect to issues material to the licencing of the applicants is clearly relevant to this appeal. In fact, the appellants’ counsel argued that the respondent’s case is hinged on verbal misrepresentation and that therefore the specifics of what was said is important.
67The appellants’ position is, not that the Occurrence Report is irrelevant, but that it deals which such a central issue in the appeal, and its reliability is so dubious, that the prejudice in admitting the evidence outweighs its probative value and it should therefore not be admitted. We find that the concerns raised by the appellants can be dealt with when considering the weight that we give the contents of the Occurrence Report. We admitted the document into evidence and invited the parties to make submissions in their closing arguments as to the weight that should be given to its contents.
68The Occurrence Report was prepared in the course of DC D’Andrea’s duties as a police officer. Although he relied on some hearsay evidence with respect to some parts of the report, the interview summaries that are at issue were based on interviews that DC D’Andrea conducted himself. DC D’Andrea was a credible witness, and we accept that he attempted in good faith to provide an accurate synopsis of the interviews.
69There are number of factors which we find negatively impact the reliability of the interview summaries for the purposes of this appeal and those include:
a. The summaries do not include all of the information provided by Manoharan and Subramanian. DC D’Andrea chose the information to include and the information to exclude. He also chose the wording to use when recording the information being provided. DC D’Andrea’s decisions and choice of words may have been affected by the purpose to which the Occurrence Report was to be put – the investigation of an attempted murder. Different information and different language may have been chosen had the investigation been otherwise focussed. Moreover, DC D’Andrea may have misinterpreted something that was said during the interview, particularly with respect to information that was not particularly relevant to the investigation he was conducting.
b. Manoharan was interviewed just a few hours after she witnessed the shooting of her husband. DC D’Andrea acknowledged that Manoharan was very upset at the time. This may have impacted the accuracy of the statements she was making.
c. Subramanian’s interviews took place the day of the shooting and two days later. He was taking pain medication and was undoubtedly upset by the traumatic incident. Both of these factors may have affected the accuracy of his statements.
d. As with DC D’Andrea, the focus of Manoharan and Subramanian when being interviewed was likely on information relevant to the attempted murder investigation. They may not have been as careful to be accurate when stating information not relevant to that investigation.
e. In the summaries, context might be lost. In order to understand answers to a question, one must first understand the question. The majority of the summaries were not in question-and-answer form. Only the answers were provided. This diminished our ability to understand what was actually intended by what was said.
70It is relevant that the Registrar did not produce, or even request, the audio or video recordings of the interviews. That would have been the best evidence about DC D’Andrea’s questions and Manoharan’s and Subramanian’s replies. Those recordings were available to the Registrar and could have either been transcribed by a certified court reporter or produced at the hearing.
71We conclude that the contents of the Occurrence Report are relevant, but we have concerns with respect to their reliability with respect to the issues in this appeal and particularly those surrounding the allegations of misrepresentation relied on by the Registrar. In the circumstances, we place limited weight on the contents of the Occurrence Report.
Statements made by Manoharan regarding shooting
72In DC D’Andrea’s synopsis of his interview with Manoharan, he indicates that she said:
“it may be tow truck related but obviously someone was hired to do this”
“my body shop got burned, my tow trucks got burned”
“they need to do something about this, we have no other beef this is it, when people do well no one can handle it”
73In the synopses of the interviews of Subramanian, it is clear that Subramanian has some level of involvement in the towing industry and that he believed that others in that industry were responsible for his being shot. He does not specifically say that he owned a towing company, but that would be a reasonable conclusion given the statements attributed to him. The name of the towing company that he is associated with is not clear from the synopsis, but he apparently told DC D’Andrea several times that some of his trucks had been set ablaze recently and that he was the target of other tow truck operators.
74When Mr. Taylor interviewed Manoharan in February 2021, she had been told that the theories about who might be behind the shooting she and Subramanian suggested to police had not resulted in any arrests and that the identities of the persons responsible for the shooting were unknown. According to Mr. Taylor’s eligibility report, when asked who she thought was responsible for the shooting, “she advised she has no idea. She believes it was a case of mistaken identity…that her husband is a victim”.
75The Registrar argues that Manoharan was not being truthful when she told Mr. Taylor that she believes that the shooting was a case of mistaken identity. The Registrar asks the Tribunal to find that she believed that the shooting was related to Subramanian’s involvement in the towing industry and that she was trying to distance herself and Subramanian from that industry when speaking with Mr. Taylor.
76We do not accept the Registrar’s submission. First, in addition to suggesting to Mr. Taylor that she believed the shooting was a case of mistaken identity, she also said she had no idea who was responsible for the shooting. Aside from the fact that this is very probably true, this statement was made after the police had completed their investigation of the shooting, following the leads provided to them by Manoharan and Subramanian, and advised Manoharan that they were unable to determine who was responsible for the shooting.
77Second, Manoharan does not suggest that Subramanian was never involved in the towing industry. Her evidence is that neither she nor T-Dot own any tow trucks and have not owned any towing company. She also says that neither she nor Subramanian own Prime Towing, which is a company that rents space in a building owned by Subramanian. There was no evidence presented at the hearing to suggest that her evidence in that regard was not true.
78Finally, although the Registrar implies that Subramanian was involved in some manner of gang violence involving rival trucking companies, there was no evidence presented at the hearing that Subramanian was anything but a victim of that violence. DC D’Andrea confirmed that Manoharan and Subramanian were cooperative in the police investigation following the shooting, provided a number of leads to investigators, and appeared to desire that the shooting be solved. DC D’Andrea confirmed that there had been violence involving some tow truck companies in the Toronto area in the recent past, and that arrests had been made; however, he also said that Subramanian had not been charged and that he was not a suspect in any of the violent incidents.
79In summary, we are not persuaded that Manoharan has been dishonest with respect to the information she provided to the police or to the AGCO investigator on this issue. The evidence about what she specifically said to the police, rather than a summary of that statement, was not presented at the hearing. The statement given to police was within hours of the shooting and while Manoharan was extremely upset and agitated. The information given to Mr. Taylor was given many months later, and after the police investigation had yielded no information as to the identity of the attackers. In any event, the statements are not contradictory and neither statement has been shown by the Registrar to be untrue at the time it was made.
Misrepresentations regarding Manoharan’s involvement in the towing business and Subramanian’s involvement in T-Dot
80As noted above, DC D’Andrea’s interview summaries indicate that Manoharan said “my tow trucks got burned”. His summaries of the interviews with Subramanian indicate that Subramanian referred to “our tow trucks” or “our trucks” on several occasions. With respect to Subramanian’s interview, there is no indication that “our” means his and Manoharan’s. With respect to Manoharan’s interview, she denies she would have used the term “my tow trucks”. She denies that she or T-Dot ever owned tow trucks.
81We are not satisfied that the Registrar has proven that Manoharan or T-Dot has ever owned tow trucks or has been involved in the tow truck industry. Neither Mr. Schmidt nor Mr. Taylor presented evidence of that. The only evidence that the Registrar presented that Manoharan or T-Dot did own tow trucks or has been involved in the tow truck industry is the use of the word “my” in the summary of an interview conducted within hours of Manoharan’s husband’s attempted murder.
82After consideration of the evidence presented at the hearing, we are unable to conclude that Manoharan is being dishonest about these issues.
Previous disciplinary proceeding
83T-Dot Auto Sales Inc. (“Auto Sales”) was registered as a motor vehicle dealer in August 2012. Around that time, Manoharan was registered as a motor vehicle salesperson and was the director and person in charge of Auto Sales.
84On August 21, 2018, a Discipline Decision under the Motor Vehicle Dealers Act, 2002, held that Auto Sales and Manoharan breached the statutory Code of Ethics by selling four vehicles without disclosing that they had been in accidents resulting in their being declared total losses. She was fined $5,000 and required to complete a remedial course.
85A review of the Decision shows that confirmation was provided to OMVIC that the purchasers were aware of their vehicles’ history at the time of purchase and the conduct breaches amounted to failure to ensure that the vehicle histories were contained in the bills of sale, rather than dishonesty to the detriment of the consumer.
86We note that Manoharan and Auto Sales were allowed to retain their registrations. We also note that this Decision was disclosed to the AGCO when T-Dot was registered as a CRO in 2020.
87Although forming part of the relevant past conduct of Manoharan, we are not satisfied that this adds significant support to the Registrar’s position with respect to Manoharan’s ineligibility for licencing.
Conclusion regarding past conduct of Manoharan
88We are not satisfied that Manoharan’s past conduct provides reason to believe that she or T-Dot will not act in accordance with the law, or with integrity, honesty or in the public interest.
Issue 3: Financial Responsibility
89The evidence is that T-Dot’s business was profitable and that it produced employment income for each of Manoharan and Subramanian in the range of about $75,000 to $100,000 per year. Manoharan retained qualified persons to manage T-Dot and there do not appear to have been any history of financial mismanagement, insolvency, indebtedness, supplier non-payment, or any other indicia of serious concern.
90According to the evidence at the hearing, Manoharan has successfully operated a number of businesses since 2008 and no evidence was presented that any of those businesses were operated financially irresponsibly. The Registrar pointed out that the net worth of Manoharan and Subramanian have increased significantly over the past decade while at the same time, both persons drew relatively modest incomes from their enterprises. The Registrar asks the Tribunal to infer that that they were engaged in behaviour that was, if not dishonest, then at least suspicious. There was no evidence presented to support such an inference. Rather, we find that this is evidence of financial prudence and supportive of a conclusion that Manoharan has a history of financial responsibility.
91Mr. Schmidt testified about several issues which the Registrar says provide reason to believe that T-Dot will not be financially responsible. They include the following:
There were many bookkeeping errors in the financial statements relating to Manoharan’s other corporate holdings. Mr. Schmidt did not detail what those errors were, but he says that they would have been caught and corrected had Manoharan’s external accountants completed a review engagement rather than a notice to reader.
There were a number of loans between Manoharan’s other corporations and corporations owned by Subramanian. Mr. Schmidt did not say that anyone other than Manoharan provided financing with respect to T-Dot.
There were errors on Manoharan’s and Subramanian’s tax returns. In particular Subramanian failed to include gains on the sale of two properties on his tax returns.
Mr. Schmidt says that he had difficulty determining the source of capital with respect to some of the companies owned by Manoharan and Subramanian. He said he did not delve deeply into the companies’ financing and did not review any general ledgers.
92Mr. Schmidt did not opine that any of the above issues were signs of illegality or dishonesty, or that they should make T-Dot or Manoharan ineligible for licencing. He acknowledged that Manoharan was fully co-operative and provided all documents that he asked her for as well as making her accountant available to provide information he requested. Mr. Schmidt said that, when he was told by the AGCO to terminate his investigation, he still had some questions about the accounting but did not pursue those with Manoharan.
93According to Manoharan, she has hired a new accountant and two new bookkeepers in response to Mr. Schmidt’s concerns about her previous accounting inaccuracies. It is her intention to have one bookkeeper working for each cannabis store location. She also intends to have regular review engagements conducted rather than the notice to reader engagements that were done previously. According to Mr. Schmidt, this should resolve the accounting issues he noted.
94The evidence at the hearing fails to demonstrate that T-Dot would not be financially responsible in the conduct if its cannabis retail business, having regard to the financial histories of T-Dot or Manoharan. Although Mr. Schmidt may have had questions about a number of issues, he was unable to say at the hearing that the answers would have been unsatisfactory since his investigation was closed before he was able to ask them.
95We are not satisfied that the Registrar has shown that there are reasonable grounds to believe that T-Dot will not be financially responsible in the conduct of its cannabis retail business, having regard to the financial history of T-Dot and Manoharan.
Issue 4: Has Manoharan made a false statement or provided false information?
96Aside from the evidence reviewed above, the Registrar presented no evidence that Manoharan made a false statement or provided false information in the application. As discussed above, we are not satisfied that the Registrar has proven that false statements were made or that false information was provided.
F. Conclusion
97We find that the Registrar has not proven that Subramanian is an interested person with respect to T-Dot.
98We find that the Registrar has failed to establish that there are reasonable grounds to believe that Manoharan will not act in accordance with the law, or with integrity, honesty or in the public interest, having regard to her past or present conduct.
99We find that the Registrar has failed to establish that there are reasonable grounds to believe that T-Dot will not act in accordance with the law, or with integrity, honesty or in the public interest, having regard to the past or present conduct of Manoharan.
100We find that the Registrar has failed to establish that there are reasonable grounds to believe that T-Dot will not be financially responsible in the conduct of its cannabis retail business, having regard to its financial history or the financial history of Manoharan.
101We find that the Registrar has failed to show that T-Dot will not exercise sufficient control over its cannabis retail business or that it has made a false statement or provided false information in the application.
102With respect to conditions, the appellants have acknowledged Mr. Schmidt’s concerns with respect to the accuracy and quality of the accounts submitted by T-Dot and Manoharan. Mr. Schmidt says that this concern would be mitigated by the conduct of review engagements rather than notices to reader. We find that it is a reasonable condition to the licencing of T-Dot that annual review engagements be conducted.
G. ORDER
103Pursuant to sections 15(2)(a), 15(2)(b) and 15(3) of the Act, the Tribunal substitutes its opinion for that of the Registrar, orders that the NOP refusing to issue a CRM licence to Manoharan and revoking T-Dot’s CRO licence be set aside, and directs the Registrar to issue a CRM licence without conditions to Manoharan
104Further and pursuant to section 15(4) of the Act, the Tribunal orders that T-Dot’s CRO licence be conditional on the conducting of annual review engagements.
LICENCE APPEAL TRIBUNAL
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Colin Osterberg, Member
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Laura Goulet, Member
Released: June 2, 2022
Footnotes
- Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon’s), 2013 ONCA 157 at 18-19.
- Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40 at para.114.
- CS v. Registrar, Real Estate and Business Brokers Act, 2002, 2019 ONSC 1652 at para. 32