Licence Appeal Tribunal
Appeal from a Cancellation and Seizure Order issued by the Registrar issued under s. 47 and 47.1 of the Highway Traffic Act
Between:
1649376 Ontario Inc. and Betts Transportation Inc. Appellant
and
Registrar of Motor Vehicles Respondent
DECISION AND ORDER
Adjudicator: Colin Osterberg, Member
Appearances:
For the Appellants: Gary Betts, Owner of Betts Transportation Inc. Kimberly Patterson, Owner of 1649376 Ontario Inc.
For the Respondent: Adriana Nigro, Counsel
Heard by Videoconference: August 8 and 9, 2022
REASONS FOR DECISION AND ORDER
A. Overview
1The appellants, 1649376 Ontario Inc. (“1649376”) and Betts Transportation Inc. (“Betts Inc.”), are corporations which operate commercial vehicles in Ontario and hold Commercial Vehicle Operator Registration (“CVOR”) certificates that allow them to operate commercial vehicles on public roads. Each has appealed a Cancellation and Seizure Order issued by the Registrar of Motor Vehicles (“Registrar”). The two appeals are being heard together because they involve common issues of fact and law. The parties have consented to have the Tribunal treat the evidence presented in each appeal as if it were admitted in both appeals in accordance with s. 9.1(5) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22.
2On April 12, 2022, the Registrar issued a Cancellation and Seizure Order (“Cancellation Order”) proposing to cancel the CVOR certificates and plate portions of permits, and to seize the plate portion of permits and number plates for all commercial motor vehicles and trailers registered to the appellants. The Registrar’s proposal is based on the ground that the Registrar has reason to believe that the appellants will not operate commercial vehicles safely or in accordance with the regulations and other laws relating to highway safety under s. 47(1)(f) of the Highway Traffic Act, R.S.O. 1990, c. H. 8 (the “Act”).
3The appellants appeal the Cancellation Order to the Tribunal pursuant to s. 50(1) of the Act.
4Based on all the evidence, I find that there is reason to believe that the appellants will not operate commercial vehicles safely or in accordance with laws relating to highway safety and, for the reasons set out below, I confirm the Cancellation Order.
B. ISSUES
5The issue in this appeal is whether the Registrar has proven that there is reason to believe, having regard to the safety record of the appellants or of a person related to the appellants, and any other relevant information, that the appellants will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
C. LAW
6Under s. 47(1)(f) of the Act, the Registrar may suspend or cancel the plate portion of a permit and a CVOR certificate if the Registrar has reason to believe, having regard to the safety record of the holder or of a person related to the holder, and any other information that the Registrar considers relevant, that the holder will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
7Section 17(4) of the Act states that an applicant is related to a person if:
(a) the applicant and the person are related individuals:
(b) either the applicant or the person is a partner of the other or was a partner of the other or they have or have had partners in common;
(c) either the applicant or the person, directly or indirectly, controls or controlled or manages or managed the other; or
(d) the applicant and the person have or have had common officers or directors, or they are or have been controlled, directly or indirectly, by the same shareholders.
8Section 47(2.1) of the Act states that section 17(4) applies with the modifications necessary for determining “related persons” for the purposes of s. 47(1)(f).
9The Registrar and the Tribunal are required under s. 47(1)(f) to have regard to the safety record of both companies when determining whether each of the appellants’ CVOR certificates ought to be cancelled. The Tribunal owes no deference to the Registrar in arriving at its decision.
10With respect to the standard of proof, it is “reason to believe.” In applying similar wording in another regulatory statute, that is, “reasonable grounds for belief,” the Ontario Court of Appeal has stated as follows:
The standard of proof provided by s. 6(2)(d) of the Act 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
11I find there is no meaningful difference between the words “reason to believe” and “reasonable grounds for belief.” The standard of proof 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 appellants’ past safety records and their ability to operate a commercial vehicle safely.3
D. EVIDENCE AND ANALYSIS
Background
12Gary Betts has been a commercial trucking operator for more than 40 years. For most of that time, he worked either as an employee or independent contractor for other companies. However, in around 2016, Mr. Betts began purchasing trucks and hiring drivers. He incorporated Betts Inc. and a CVOR certificate was issued for that company.
13From December 2016 until January 2, 2020, Mr. Betts operated Betts Inc. and had between 8 and 10 drivers working for him as well as between 9 and 20 vehicles which were either owned by Betts Inc. or leased from other companies. During that time, Betts Inc. had contracts with local businesses for the transportation of steel products. All of these contracts required travel within Ontario only.
14Ms. Patterson is the owner of 1649376 and its sole director and officer. The records produced at the hearing show that 1649376 was issued a CVOR Certificate on September 1, 2008. According to Ms. Patterson, she and her father operated a carrier company under this certificate until approximately 2012. The records filed by the Registrar show that this company operated from June 30, 2009 until September 30, 2012 after which no activity was reported – i.e. no kilometers were travelled under the CVOR Certificate.
15In approximately 2018, Ms. Patterson and Mr. Betts entered into a business and romantic relationship. Ms. Patterson held an administrative position with Betts Inc. and, as will be discussed below, had some involvement in the management of its commercial trucking operation. They also dated and lived together for a period of time.
16On January 2, 2020, Betts Inc. sold its vehicles to 1649376 which then carried on the same operation as Betts Inc. had previously. According to Ms. Patterson, she was unable to fully participate in the operation of the business due to various health problems, and so she asked Mr. Betts to help her run the business until she recovered. Also, because 1649376 did not have a valid CVOR Certificate at that time, its vehicles were operated using the CVOR Certificate issued to Betts Inc. It is unclear from the evidence whether the vehicles were leased to Betts Inc. or what the financial arrangements were, but Ms. Patterson says that Mr. Betts helped her run the business until about July 2021 when she fully took over. Since then, Mr. Betts has had nothing to do with the operation of 1649376.
17The records filed by the Registrar show that the CVOR Certificate issued to 1649376 became active on July 26, 2021. At that time the company filed an application to reinstate its CVOR Certificate and reported that it intended to operate with one commercial vehicle, travelling approximately 50,000 kilometers per year, in Ontario. It is unclear why this information was provided at the time since 1649376 owned several commercial vehicles and employed at least two drivers.
18The evidence is that 1649376 intends to carry on its operation with no involvement from Mr. Betts or Betts Inc. and that Mr. Betts’ intends to operate a commercial trucking business as a single operator. That is, he no longer wishes to employ drivers or own multiple vehicles. He has secured a contract where he leases a truck and a trailer and transports trusses for local home builders in the Mennonite community.
19The Registrar argues that it has reason to believe that Betts Inc. will not operate a commercial vehicle safely and has determined to cancel its CVOR Certificate and that of 1649376, which the Registrar says is “related” to Betts Inc.
20Mr. Betts argues that he and Betts Inc. no longer operate as they did between December 2016 and January 2020 (a little over three years) and that he has demonstrated over the course of a 40-year career as a driver of commercial vehicles that he will operate a commercial vehicle as an independent operator safely.
21Ms. Patterson intends to operate 1649376 conducting the same business activities Betts Inc. was previously engaged in. She argues that neither she nor 1649376 is related to Betts Inc. and that its safety record does not provide reason to believe that 1649376 will not operate a commercial vehicle safely since neither Mr. Betts nor Betts Inc. are currently involved with the operation of 1649376.
The CVOR System
22Lisa Venier gave evidence at the hearing. Ms. Venier has been employed in the carrier sanctions and investigations office of the Ministry of Transportation (“MTO”) for 25 years and is currently a senior program administrator. In her evidence, she explained the CVOR monitoring system and the historical performance of the appellants in relation to that system.
23Ms. Venier said that the CVOR system is part of the carrier safety rating program whereby the MTO monitors operators and assigns each a safety rating based on several factors including collisions, inspections, and convictions. The purpose of the CVOR system is to promote the safe operation of trucks and buses on Ontario’s roadways.
24Ms. Venier explained that each operator is assigned a “threshold” number of points by which to assess the operator’s performance. The threshold is set based on the number of kilometers the operator is expected to travel in a twelve-month period. Infractions are tracked in a computer database which collects data from various sources including police reports and road safety officer reports. Infractions are assigned points which the computer system expresses as a percentage when compared with the assigned threshold. This percentage is referred to as a violation rate (“VR”).
25VRs are maintained with respect to the three safety factors noted above – collisions, inspections, and convictions – using the assigned threshold and the violation record for the previous two years. The CVOR system keeps track of the violation rates with respect to the three safety factors both individually and combined as an overall violation rate (“OVR”). The OVR is calculated based on a weighted average of the three safety factors with the collision VR contributing 40% toward the OVR, the conviction VR contributing 40%, and the inspection VR contributing 20% of the total.
26Infraction points remain on an operator’s record for two years resulting in a rolling average which is accessible to the Registrar and the operator at any given time. Operators can obtain CVOR Abstracts which provide detailed information with respect to its VRs and OVR, and the Registrar recommends that operators review the abstracts at least twice a year so that they can determine whether there are any problem areas which need attention.
27Ms. Venier testified that, when an operator’s OVR reaches certain trigger points, the system will flag that as an issue which may need the Registrar’s attention. Generally, when an operator’s OVR reaches 35%, the Registrar will issue a warning letter advising the operator that it needs to take corrective action. When the OVR reaches 50%, a facility audit may take place. At 85%, there may be an interview and at 100% the Registrar will consider sanctions ranging from suspension to cancellation. Ms. Venier stressed that these actions are not automatic, and the action taken by the Registrar depends on the overall history of the operator, the circumstances surrounding the violations in question, the significance of the events of concern, and any other factors relevant to the operator’s safety record.
28Prior to imposing sanctions, it is the Registrar’s practice to invite the operator to a meeting to discuss its safety record and any remedial measures the operator proposes to employ to improve its performance. This meeting is called a Show Cause Meeting and is conducted by the Deputy Registrar. Following that meeting, the Registrar may issue a Cancellation and Seizure Order, issue a suspension notice, or take no action, giving the operator an opportunity to improve its safety record based on the remedial measures the operator puts forward.
29According to Ms. Venier, interventions such as warning letters and facility audits are usually very successful, with about 80% of subject operators improving their violation rates to acceptable levels and never needing another intervention. The Registrar is concerned when an operator is chronically non-compliant and continues to demonstrate poor safety performance despite multiple interventions. Depending on the circumstances, the Registrar will propose sanctions, including cancellation and seizure, where there is chronic non-compliance even where VRs and OVR are not over 100%.
30Ms. Venier presented industry averages for all operators in Ontario. As of June 2022, there were 63,616 registered operators in Ontario. 98.87% of those had a OVR of less than 35% and 99.67% had an OVR of less than 50%. Only 0.02% of operators had an OVR over 100%.
Betts Inc.’s Record
31Betts Inc. first came to the attention of the MTO when a Facility Audit was conducted on January 25, 2018. Betts Inc. failed that audit and received a conditional safety rating as a result.
32Betts Inc. came to the attention of the MTO again on June 28, 2018 as the result of having an OVR of 120.24%. As of December 9, 2018, its OVR was 135.17%. At that time, the convictions VR was 211.40% and the inspections VR was 171.76%. The collisions VR was 40.65%. Ms. Venier testified that this reflects a company which is not maintaining its vehicles to a satisfactory standard and employs drivers who are not properly trained. The collisions VR reflects two collisions in the previous two years involving Betts Inc.’s drivers.
33At the same time, the OVR for Mr. Betts was 13.1%. His CVOR record shows a collision VR of 32.72% as the result of one collision in the previous two years which resulted in property damage. That there was any activity on Mr. Betts’ CVOR record is concerning given that he did not have a valid CVOR Certificate at that time. His inspection VR and convictions VR were both 0%.
34A Show Cause Meeting was held February 6, 2019. That meeting was attended by Mr. Betts and Ms. Patterson, who Mr. Betts identified as the bookkeeper for Betts Inc. although the corporate filings for that company listed her as Secretary of the corporation. During the Show Cause Meeting, Mr. Betts and Ms. Patterson participated by asking and answering questions and both seemed to have some responsibility for monitoring the actions of drivers with respect to safety.
35At the end of the Show Cause meeting, the MTO concluded that Betts Inc. had no infrastructure to be successful and did not have a monitoring system for its drivers, inspections, or maintenance. It required that an action plan be filed indicating how the company was going to gain the knowledge required to operate safely. An action plan was submitted which provided, in part, that Mr. Betts and Ms. Patterson would be taking courses “to provide them with all the tools they need to operate Betts Transportation to meet all MTO Standards” and that Ms. Patterson intended to take an online dispatch course.
36The action plan also said that Mr. Betts and Ms. Patterson would take a number of different actions to improve safety, including having regular safety training, meeting with drivers to discuss accidents and other safety issues, hiring an outside consultant to provide training, and implementing a vehicle maintenance program. The action plan makes it clear that both Mr. Betts and Ms. Patterson were going to be involved in the planning and implementation of the action plan.
37Ms. Patterson’s attendance at, and participation in, the Show Cause Meeting, her appearance as an Officer of Betts Inc. on its corporate filings and her anticipated role in the company according to the action plan is evidence that Ms. Patterson was actively involved in the management and operations of Betts Inc. since 2018 and that she had responsibility for the safe operations of Betts Inc.’s commercial vehicles.
38As of October 30, 2019, Betts Inc.’s performance had not improved, the MTO issued a suspension order and Betts Inc. served a 30-day suspension from November 12, 2019 to December 12, 2019. It was following this suspension order that, on January 2, 2020, Betts Inc. sold its vehicles to 1649376. The Registrar does not allege that the sale was completed in order to avoid the consequences of its previously poor safety performance and Mr. Betts says that the vehicles were sold because he realized that he was not capable of managing a company with multiple drivers and multiple vehicles.
39Despite the fact that both Mr. Betts and Ms. Patterson understood by January 2020 that he was not able to operate the commercial vehicles now owned by 1649376, for reasons discussed below, Ms. Patterson asked Mr. Betts, and he agreed, to continue to operate the company as he had before the sale. The drivers remained the same; the company’s business activities did not change; the vehicles were the same; the safety and maintenance protocols did not change; the vehicles were operated under Betts Inc.’s CVOR Certificate; and the operation was being managed by Mr. Betts.
40As was predictable, Betts Inc.’s safety record, as reflected in its CVOR, did not improve and on December 7, 2021, its OVR was 122.81% with a convictions VR of 209.73%, an inspections VR of 195.59% and a collisions VR of 0%. Seven Level One inspections had taken place in the preceding two years and all seven resulted in the vehicles being taken out of service. Most of this two-year performance period occurred when 1649376 was the owner of the vehicles and was operating under the CVOR Certificate issued to Betts Inc.
41On January 11, 2022, the Registrar issued a Notice of Cancellation. Show Cause Meetings were arranged, and, at the request of Ms. Patterson, separate Show Cause Meetings were held with Betts Inc. and 1649376.
42The Show Cause Meeting with 1649376 was held February 17, 2022 and was attended by Ms. Patterson on behalf of the company. Ms. Patterson confirmed that she had purchased all of the trucks owned by Betts Inc. in January 2020 and that she was operating those vehicles using the CVOR Certificate issued to Betts Inc. I note that the Registrar does not allege that the arrangement was necessarily improper. At the meeting Ms. Patterson said that Mr. Betts helped her operate the company “in the beginning”. She said that Mr. Betts never drove for 1649376.
43Ms. Patterson said at the Show Cause Meeting that, over the previous two years she had been operating six or seven trucks regularly but had operated at least 20 vehicles in the last two years at different times. She said that she was basically operating the same business that Betts Inc. had operated before the sale of the vehicles.
44The Show Cause Meeting with Betts Inc. was held March 1, 2022 with Mr. Betts attending. Mr. Betts advised that he had no vehicles that he was operating and that he had one vehicle that he would like to operate but needed to get it fixed up before it could be put on the road. He said he did not work during the winter and that he delivers trusses to customers in the local Mennonite community when they build houses and barns. He said he does not want any employees and just wants to work for himself. He said he had worked as a driver for 1649376 since it had purchased the vehicles from Betts Inc. and that he had been stopped on one occasion and was charged for driving a vehicle with an expired inspection certificate.
45I accept Mr. Betts’ evidence that he continued to drive for 1649376 after it purchased the vehicles from Betts Inc. over Ms. Patterson’s evidence that he did not. There are inspection reports which name Mr. Betts as the driver during that period of time and there would be little reason why Mr. Betts would have stopped driving given that he was operating the company just as it had been operated before the sale.
46The Cancellation Order that is the subject of this appeal was issued April 12, 2022.
Position of the Registrar regarding Betts Inc.
47The Registrar argues that Betts Inc.’s safety record is extremely poor. It had very high inspection and conviction VRs and its OVR was among the worst in the province. Betts Inc.’s drivers were repeatedly found operating vehicles which had Out of Service defects and had multiple convictions over the past two years.
48Mr. Betts was one of the drivers found operating the vehicles which were deemed Out of Service and was involved in a collision in 2018 while operating a vehicle while not under a CVOR certificate at the time. There were multiple occasions when vehicles operated by Betts Inc. were found with expired inspection certificates, licence plates which were not assigned to the vehicle, absent log books, and a variety of other serious infractions. At the hearing, Mr. Betts acknowledged that he has been operating a commercial vehicle delivering trusses for customers even though his CVOR certificate is expired.
Position of Betts Inc.
49According to Mr. Betts, he no longer operates Betts Inc. in the way he had from 2016 to 2021. He has come to understand that he is not capable of properly operating with multiple vehicles and employees and his intention is to restrict himself to driving on his own. On January 2, 2020, Betts Inc. sold all of its trucks and trailers to 1649376. The evidence is that, since approximately July of 2021, Mr. Betts and Betts Inc. are not involved in the operation of any of the vehicles currently owned by 1649376.
50Mr. Betts acknowledges that the safety record of Betts Inc. was terrible. He says that he is embarrassed by it. He acknowledges that he is not capable of operating a company with multiple trucks and employees. However, he argues that he has shown over the course of 40 years that he is capable of operating on his own safely, and that he should be allowed to continue doing that.
Conclusions regarding Betts Inc.
51I find that the Registrar has satisfied the onus on it to show that it has reason to believe that Betts Inc. will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
52Betts Inc.’s safety record while Mr. Betts was in charge of its operation was, as Mr. Betts acknowledges, extremely poor. At a time when only 0.02% of commercial operators in Ontario had OVRs over 100%, Betts Inc.’s was significantly higher. Despite multiple interventions, Betts Inc. was unable to improve its performance.
53Mr. Betts blames the poor safety history of Betts Inc. on his inability to manage a company with multiple drivers and vehicles. He says that his record before he started operating Betts Inc. was good and that he is able to operate safely on his own.
54I do not accept Mr. Betts’ position. Mr. Betts presented no supporting evidence of his driving history before he started operating Betts Inc. The records we do have show that:
- Mr. Betts was involved in an at-fault collision in 2018 while driving without a CVOR;
- Mr. Betts was the operator of several vehicles which were found to have significant defects while he was driving for Betts Inc. and 1649376;
- Mr. Betts either did not understand how to, or was unable to ensure that Betts Inc. was maintaining its vehicles to an appropriate standard and fit to be used on the roadways;
- After multiple interventions by the MTO, Mr. Betts failed to take any, or sufficient, actions to ensure that his commercial vehicles were safe and that they were being operated safely;
- Despite being aware by at least January 2020, when he sold his vehicles, that he was not capable of operating a company with multiple drivers and vehicles, he did so anyway;
- Mr. Betts continued to operate commercial vehicles in 2022 after his CVOR certificate had expired.
55The evidence presented, including these listed actions, satisfy me that there is ample reason to believe that Mr. Betts will not operate a commercial vehicle safely whether he is responsible for multiple drivers and vehicles or only himself. I find that the Registrar has proven that there is reason to believe that Betts Inc. and Mr. Betts will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
Conclusions Regarding 1649376
56I find that Betts Inc. is a related person with respect to 1649376. The evidence demonstrates that Ms. Patterson directly or indirectly controlled or managed Betts Inc. from 2018 until January 2020 and that Mr. Betts and Betts Inc. directly or indirectly, controlled or managed 1649376 from January 2020 until sometime in 2021. Betts Inc. and Mr. Betts are therefore related to 1649376 under s. 17(4)(c) of the Act. Moreover, the evidence demonstrates that 1640376 and Betts Inc. had common officers or directors, namely Ms. Patterson, and are therefore related according to s. 17(4)(d) of the Act.
57As a result, the safety record of Mr. Betts and Betts Inc., in addition to any other relevant information, must be considered when determining whether there is reason to believe that 1649376 will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety and whether its CVOR certificate should be cancelled.
58I have found that Betts Inc.’s safety history provides reason to believe that it will not operate a commercial vehicle safely. The evidence is that Ms. Patterson was an officer of Betts Inc. in 2018 and that she participated in the management of that company. She attended the Show Cause Meeting in 2019 and undertook to be a participant in the efforts to improve Betts Inc.’s safety record at that meeting. There is no evidence that she followed through on that undertaking or that she took any steps to ensure that the safety record improved despite bearing some responsibility to make that happen.
59Further, even though she was aware of Betts Inc.’s poor safety record, in 2020 she purchased its vehicles and hired Mr. Betts to carry on the same, or similar, operation that he had carried on so poorly before the sale. The safety record of Betts Inc. did not improve in the two years since she took over its leadership in January 2020 and, if anything, it deteriorated even further.
60Ms. Patterson argues that 1649376 has a clear CVOR record. However, this is almost entirely due to the fact that she was operating her vehicles using the CVOR Certificate issued to Betts Inc. for much of the period being assessed. Moreover, there are 13 charges relating to vehicle inspections and driver infractions that are pending disposition at trial. These may impact 1649376’s safety record, particularly if any of the charges result in convictions.
61Considering all of the evidence, I find that the Registrar has satisfied the onus on it to show that there is reason to believe that 1649376 and Ms. Patterson will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
Remedy
62While I am not bound by the sanction imposed by the Registrar, I find that it is appropriate in the circumstances. I find that the appellants have demonstrated that alternate sanctions are unlikely to change their actions or attitudes when it comes to operational safety and that the only sanction which would adequately protect the public interest is cancellation and seizure.
63Mr. Betts and Ms. Patterson understood that there were significant safety concerns with the way Betts Inc. was being operated by at least February 2019 when the first Show Cause Meeting took place. They undertook to make changes in order to improve matters but did not follow through with those undertakings. Also, despite realizing that Mr. Betts was not capable of operating the business safely, Mr. Betts and Ms. Patterson agreed that he would continue to manage the business after the vehicles were sold to 1649376. Finally, Mr. Betts continues to operate commercial vehicles even though his CVOR Certificate is expired.
64For these reasons, and in all the circumstances, I am not satisfied that attaching conditions or restrictions to the appellants’ CVOR Certificates would adequately ensure public safety.
E. Conclusion
65I find that the Registrar has proven that there is reason to believe, having regard to the safety record of the appellants, and other relevant information, that the appellants will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
F. ORDER
66The Tribunal confirms the Cancellation and Seizure Order dated April 12, 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