Date: 2022-09-06

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

DECISION AND ORDER

Adjudicator: Colin Osterberg, Member

Appearances:

For the Appellant: Jack Lloyd, Counsel

For the Respondent: Demetrios Yiokaris, Counsel

Mireille Giroux, Counsel

Heard by Videoconference: August 8 and 9, 2022

REASONS FOR DECISION AND ORDER

A. Overview

1Pursuant to a Notice of Proposal dated November 2, 2021, as amended on May 27, 2022 (“NOP”), the Registrar proposed to refuse to renew the licence of Yarco Developments Inc. (the “appellant”) as a vendor and builder under the New Home Construction Licensing Act, 2017, S.O. 2017, c. 33, Sched.1 (the “Act”).

2The Registrar bases its NOP on the grounds that:

a. it has not been demonstrated that the appellant can reasonably be expected to be financially responsible in the conduct of business;

b. it has not been demonstrated that there are reasonable grounds for belief that the appellant’s business will be carried on in accordance with law and with integrity and honesty; and

c. granting the renewal would be contrary to the public interest.

3Manoharan Subramaniam (“Subramaniam”) is the owner of the appellant corporation and is its sole director and officer. His past conduct includes criminal convictions which the Registrar argues disentitles the appellant to licence renewal on all three of the grounds listed.

4The appellant appeals the Registrar’s NOP to the Tribunal.

B. ISSUES

5The first issue to be decided is whether, having regard to the appellant’s financial position, and that of Subramaniam, the appellant can reasonably be expected to be financially responsible in the conduct of its business according to ss. 38(1)(b)(i) and (ii) of the Act.

6The second issue to be decided is 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 according to s. 38(1)(b)(iii) of the Act.

7The third issue to be decided is whether renewing the appellant’s licence would be contrary to the public interest according to s. 38(1)(g) of the Act.

8If I determine that a licence should be granted, then the fourth issue to be decided is whether the public interest requires that conditions be attached to that licence.

C. Result

9For the reasons which follow, I substitute my opinion for that of the Registrar, set aside the NOP, and direct the Registrar to renew the appellant’s licence as a vendor and builder under the Act. I decline to impose conditions on the appellant’s licence.

D. EVIDENCE and analysis

Financial Responsibility

10Under ss. 38(1)(b)(i) and (ii) of the Act, in order to determine that the appellant is not entitled to a licence renewal, the Registrar must prove that the appellant has failed to demonstrate that it can reasonably be expected to be financially responsible in the conduct of business based on the past and present financial position of the appellant, interested persons in the appellant, the appellant’s officers and directors, and all interested persons in the appellant’s officers and directors.

11The Registrar presented very little evidence with respect to whether the appellant could be expected to be financially responsible. In particular, the Registrar did not present evidence that there are any past or present financial circumstances relating to the appellant or Subramaniam which are of concern.

12According to Subramaniam, he currently has commercial mortgages with two banks for large sums of money and has a good credit rating. He has never declared bankruptcy and there is no evidence that he is, or has been, unable to pay his debts as they became due. He says that he has been employed for more than ten years earning good income. That evidence was not challenged by the Registrar and is consistent with the credit check submitted into evidence by the Home Construction Regulatory Authority (“HCRA”).

13Based on the evidence presented at the hearing, I am 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.

The Past Conduct of the Appellant

14Under s. 38(1)(b)(iii) of the Act, the appellant will be entitled to a renewal of its licence if there are reasonable grounds for belief that its business will be carried on in accordance with the law and with integrity and honesty. This test is different than the licensing provisions in the predecessor statute, the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (“ONHWPA”). Pursuant to s. 7(b) and (c) of the ONHWPA, an applicant was entitled to registration except where past conduct afforded reasonable grounds for belief that its undertakings would not be carried out in accordance with law and with integrity and honesty.

15The ONHWPA “reasonable grounds for belief” test applied to whether the Registrar has proven the appellant will not carry out its undertakings as required. Under the current Act, the “reasonable grounds for belief” test applies to whether the appellant has proven that its business will be carried on as required.

16With respect to the standard of proof, “reasonable grounds for belief” means something less than a balance of probabilities¹, but 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

17The onus on appeal is on the Registrar to show that a licence should not be renewed and that it should proceed with the NOP.

18At the hearing, the Registrar presented evidence that Subramaniam has 22 criminal convictions arising from crimes he committed in 2006 and 2007. The crimes were with respect to his participation as a distributer in a counterfeit money operation and a debit card fraud scheme. The convictions are as follows:

a) Attempt fraud under $5,000

b) Obstruct Peace Officer x 2

c) Fail to Comply with Recognizance x 3

d) Fraud Over $5,000

e) Possession Instruments for Falsifying Credit Cards

f) Acknowledging Instrument in False Name x 3

g) Personation with Intent

h) Possession of Credit Card

i) Unauthorized Use of Credit Card Data x 3

j) Fail to Comply with Probation Order x 2

k) Fail to Comply with Pre-sentence Recognizance x 2

l) Uttering, Using, Exporting Counterfeit Money

m) Fraud Under $5,000

n) Possession of Credit Card Forgery Device

o) Breach of Conditional Order

19The details of the underlying crimes are set out in the Reasons and Decision of the Immigration and Refugee Board of Canada (“IRB”) dated November 23, 2010, the contents of which were admitted by Subramaniam at the hearing. In particular, the IRB decision states, and Subramaniam admits, the following:

a. Subramaniam amassed a serious and lengthy criminal record that encompasses 22 criminal convictions in the period beginning on April 24, 2007 and ending on February 19, 2010. The convictions arose as a result of incidents that occurred between June 2006 and December 2007.

b. Subramaniam’s criminal activities started in the fall of 2004 when he began distributing counterfeit money for commission. He ultimately sold between $400,000 and $500,000 in counterfeit money. The IRB describes Subramaniam as, and he admits that he was, a significant distributor or vendor in the largest counterfeit operation in Canadian history.

c. After his arrest for the above activities in 2006, Subramaniam required money to pay a debt he owed two of the leaders of the counterfeit operation and embarked on a new criminal scheme which involved his unlawfully extracting data from debit cards that were used by innocent customers at automatic teller machines and transferring the unauthorized data to new debit cards which were then used to take money from the customers’ bank accounts.

d. In addition to the above, Subramaniam’s convictions included criminal offences while on bail, using false names on at least two occasions when dealing with the police and violation of some of the terms and conditions imposed upon him while on bail such as unlawfully being in possession of a cell phone, curfew violations and possession of credit cards that were not in his name.

20Based on various factors such as Subramaniam’s co-operation with police after his arrest, his establishment in Canada, family and community support, and the likelihood that he would experience hardship should he be returned to Sri Lanka, the IRB stayed his deportation order with conditions including the following:

i. keeping the Canada Border Services Agency (“Agency”) advised of his current address and providing the Agency with copies of up-to-date passport and other travel documentation;

ii. reporting to the Agency any new criminal charges or convictions;

iii. reporting in person to the Agency every six months with a written report detailing his employment status, living arrangements, marital status, educational activities, counselling or therapy sessions, parole officer meetings, or other relevant changes of personal circumstances;

iv. not associating with individuals who have a criminal record or who are engaged in criminal activity;

v. refraining from the illegal use of drugs; and

vi. keeping the peace and being of good behaviour.

21On October 8, 2015, the IRB found that the stay conditions had been complied with and ordered that the Removal Order be set aside.

22Subramaniam testified that, since 2010 he has had no charges or convictions on his record. He complied with the conditions imposed on him by the IRB for five years which resulted in the deportation order being cancelled in 2015. In 2022, Subramaniam became a Canadian citizen. Subramaniam testified that he has been employed full time for the last ten years at his wife’s automobile body shop and has been a good husband and father. Subramaniam says that his wife and the IRB member who gave him a second chance influenced him to change his life and he has worked to be a law-abiding contributor to the community since 2007.

23As evidence of Subramaniam’s assertions, he has presented the IRB decision dated October 8, 2015 which states that he complied with the conditions of the stay of deportation order, and his Canadian Citizenship Certificate dated April 11, 2022. The HCRA conducted a criminal record check in 2021 and determined that there had been no charges since the convictions listed above

24The appellant also points to the fact that Subramaniam has obtained commercial mortgages from two banks for large sums of money and that he has a good credit rating as confirmed by a credit check conducted the HCRA in 2021. Subramaniam’s evidence was that he has been employed for more than ten years earning good income. That evidence was not challenged by the Registrar and is consistent with the credit check performed for the HCRA and his credit history

25The HCRA file confirms that, aside from his criminal past, Subramaniam satisfies all HCRA requirements for renewal of a licence: he has a good credit rating; he meets HCRA’s educational and competency requirements; and his previous licence is in good standing with no complaints.

26The appellant points out that Subramaniam’s criminal past only came to the attention of HCRA because he told them about it. The application for renewal includes questions about whether the applicant or its officers and directors have a record of criminal convictions and Subramaniam answered those questions truthfully disclosing his history accurately. The representatives of HCRA who testified admitted that HCRA only does criminal record checks when an applicant states on the application that there is such a record and that, if Subramaniam had not been truthful in his application for renewal, HRCA would likely never have known about his criminal record. The appellant argues that this speaks to Subramaniam’s honesty and integrity.

27The Act is consumer protection legislation as is the ONHWPA. The Court of Appeal stated in Ontario New Home Warranty Program v. Lukenda, 1991 CanLII 7167:

The major purpose of the Plan Act is the protect purchasers of new homes by requiring that vendors and builders be screened for financial responsibility, integrity and technical competence.

28The Tribunal has reaffirmed the consumer protection purpose of the ONHWPA on numerous occasions since then and has found that to be the Act’s purpose recently in 1957922 Ontario Ltd. V. Registrar, New Home Construction Licencing Act, 2017, 2022 CanLII 49929 (ONLAT), in which the Tribunal stated that “the Act is consumer protection legislation, and the stakes are high for homebuyers.” I agree.

29I also agree with the Registrar that past criminal convictions may be relevant in determining whether there is reason to believe a business will be carried on in accordance with law and honesty and integrity.³

30However, past conduct involving criminal conduct may not, in and of itself, preclude licensing, especially if it is dated.⁴

31Moreover, I note that previous decisions dealing with past criminal behaviour were considering whether that criminal behaviour gave rise to reason for belief that the appellants’ businesses would not be carried on in accordance with the law and with honesty and integrity. In the present appeal, the question is different: does the past and present conduct of Subramaniam (including his past criminal behaviour) afford reasonable grounds for belief that the appellant’s business will be carried on in accordance with the law and with honesty and integrity?

32In the present case, the conduct of Subramaniam occurred more than 15 years ago and occurred over approximately a two-year period. The criminal convictions are serious and are all either crimes of dishonesty or ones which are against the administration of justice. They are therefore relevant in considering whether Subramaniam will act in accordance with the law, in particular whether he will comply with the Act and its regulations, and whether he will act honestly and with integrity.

33The evidence demonstrates that, since 2007, Subramaniam has not been charged or convicted of any offences. Subramaniam has been employed for more than ten years earning good income. He has multiple loans and mortgages from major banking institutions all of which are in good standing and he has a very good credit rating.

34Subramaniam complied with the conditions attached to the IRB order staying his deportation order for five years and, as a result, that order was overturned. He is now a Canadian Citizen.

35The evidence shows that Subramaniam completed all the training required by Tarion for the purposes of registration in 2017. The appellant was registered with Tarion in 2017 and there have been no complaints or concerns expressed in relation to that registration since then. The Registrar argued that the fact that there have been no enrollments since that time is concerning and suggested that the appellant had been acting as a builder or vendor without enrolling with Tarion as is required. There is no evidence of this, and I find that to be only speculation.

36Subramaniam says that he has not enrolled any building projects since 2017 because he has been shadowing other builders on their projects so that when he does build a house on his own, he will have experience and do the work properly. I see no reason to disbelieve Subramaniam’s explanation.

37As noted above, Subramaniam answered the application’s questions dealing with his criminal history honestly. The evidence of the witnesses presented by the Registrar was that Subramaniam’s criminal history would likely not have become known to it had he not disclosed that history in the application. In my view, the fact that Subramaniam was forthright in providing information about his criminal history in the application speaks positively to his honesty and the likelihood that he and the appellant would act with honesty and integrity in the future.

38At the hearing, Subramaniam did not attempt to minimize his past criminal behaviour or to provide an explanation that might put those activities in a better light. He fully admitted to his conduct and made no excuses for it. He gave compelling evidence at the hearing to the effect that his life has turned around and that he has acted as a law-abiding, contributing member of the community for over a decade and will continue to do so in the future.

39Having considered all the evidence, I find 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.

Public Interest

40Under s. 38(1)(g), the appellant is entitled to a renewal of its licence if, in the Registrar’s opinion, granting the renewal would not be contrary to the public interest.

41The Registrar argued that it would be contrary to the public interest to grant a renewal to the appellant since there is reason to believe that the appellant will not carry on business in accordance with law and with honesty and integrity based on Subramaniam’s history of criminal convictions.

42In my view, the standard of proof under s. 38(1)(g) is the balance of probabilities and not reason for belief. If the Legislature had intended that the standard should be reason for belief, then it would have stated that in the provision as it did in other parts of s. 38(1). Further, if the Legislature had intended that an applicant be disentitled to a licence renewal if there is reason to believe that the appellant will not carry on business in accordance with law and with honesty and integrity, then it would have stated that in the Act as it had in the ONHWPA and in a number of other licensing statutes containing similar provisions.

43I find that s. 38(1)(g) requires that, to disentitle the appellant to renewal of its licence, the Registrar must prove on a balance of probabilities that granting the renewal would be contrary to the public interest.

44I also find that it would be contrary to the public interest to grant a licence to a corporation which, on a balance of probabilities, will not carry on business in accordance with the law and with integrity and honesty. As the Court of Appeal stated in Ontario New Home Warranty Program v. Lukenda (supra), a major purpose of Act is the protect purchasers of new homes by requiring that vendors and builders be screened for financial responsibility, integrity and technical competence.

45In my view, the Registrar has not proven on a balance of probabilities that the appellant will not carry on business in accordance with the law or with honesty or integrity based on Subramaniam’s past and present conduct. His history of criminal behaviour occurred 15 years ago and was relatively short-lived. The evidence does not support that Subramaniam continued his criminal activities after 2007. The evidence is that Subramaniam has been gainfully employed for the last 10 years, has a history of compliance with the ONHWPA and the conditions imposed on him by the IRB stay order. Subramaniam expressed remorse for his previous criminal activities and a sincere intention to act within the law and to the benefit of his family and community.

46I am not satisfied that the appellant will not carry on business in accordance with the law or with honesty or integrity on a balance of probabilities. I find that the Registrar has not satisfied the onus on it to prove on a balance of probabilities that granting a licence to the appellant would be contrary to the public interest.

E. conditions

47Conditions should be based on the grounds for concern which are established by the evidence. Since I have found that the evidence establishes that the appellant can reasonably be expected to be financially responsible in the conduct of business, 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 granting a licence to the appellant would not be contrary to the public interest, I am not satisfied that conditions on registration are warranted.

F. ORDER

48For the forgoing reasons, I substitute my opinion for that of the Registrar, set aside the NOP, and direct the Registrar to renew the appellant’s licence as a vendor and builder under the Act.

LICENCE APPEAL TRIBUNAL

_________________________

Colin Osterberg, Member

Footnotes

1. 1Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon’s), 2013 ONCA 157 at 18-19.
2. 2Mugesera v. Canada (Minister or Citizenship and Immigration), 2005 SCC 40 at para. 114.
3. 3see Registrar, Motor Vehicles Act v. Jacobs, 2004 CanLII 9450 (“Jacobs”), Hudson v. Registrar, Baliffs Act, 2018 CanLII 105354 (ON LAT) (“Hudson”), McKenzie v. Registrar under the Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996, 2020 CanLII 27372 (ON LAT) (“McKenzie”), Paul Panton v. Registrar, Real Estate and Business Brokers Act, 2002, 2018 CanLII 50252 (ON LAT) (“Panton”) and Moreno v. Registrar, Real Estate and Business Brokers Act, 2002, 2019 CanLII 119778 (ON LAT) (“Moreno”)
4. 4see Ontario v. Mander, 2018 ONSC 1795 (Div. Ct.); 11603 v. Registrar, Real Estate and Business Brokers Act, 2002, 2019 CanLII 32288 (ON LAT); Moreno v. Registrar, Real Estate and Business Brokers Act, 2002, 2019 CanLII 119778 (ON LAT); Goldlist v. Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996, 2021 CanLII 30519 (ON LAT)