An appeal under from a Cancellation and Seizure Order of the Registrar of Motor Vehicles under the Highway Traffic Act, R.S.O. 1990, c. H.8
Between:
2017210 Ontario Inc.
Appellant
and
Registrar of Motor Vehicles
Respondent
DECISION AND ORDER
ADJUDICATOR: Avril A. Farlam, Vice-Chair
APPEARANCES:
For the Appellant: Derek Zulianello and Ryan Bodnar, Counsel
For the Respondent: Patrick Moore, Counsel
Heard by Videoconference: July 26, 27 and July 28, 2022
REASONS FOR DECISION AND ORDER
BACKGROUND
12017210 Ontario Inc. (the “appellant”), 937 Alloy Drive, Thunder Bay, Ontario (the “appellant’s address”), is a towing company holding a Commercial Vehicle Operator Registration (“CVOR”) certificate which allows it to operate commercial vehicles on public roads. Starting in approximately 2016, the appellant has been involved in bankruptcy proceedings.
2The Deputy Registrar of Motor Vehicles (the “Registrar”) issued a Cancellation and Seizure Order dated November 24, 2021 (the “Order”) pursuant to ss. 47 and 47.1 of the Highway Traffic Act, 1990, c. H.8 (the “Act”) cancelling the appellant’s CVOR Certificate #150-874-335 and the plate portions of permits for all commercial motor vehicles and trailers issued to the appellant’s CVOR.
3The appellant appealed the Order to the Tribunal pursuant to s. 50(1) of the Act.
ISSUES
4The issues before me are:
(a) Is there reason to believe, having regard to the safety record of the appellant or of a person related to the appellant, and any other relevant information, that the appellant will not operate a commercial motor safely or in accordance with the Act, the regulations and other laws relating to highway safety?
(b) If the answer to the first issue is yes, what is the appropriate outcome?
RESULT
5For the reasons set out below, I confirm the Order and decline to modify the Order by the imposition of conditions or a lesser penalty.
LAW
6Under s. 16(2) of the Act, a person or corporation who operates a commercial vehicle in Ontario, including a tow truck, is required to hold a valid CVOR certificate issued by the Registrar.
7The Registrar is required to keep a safety record of all CVOR operators as set out in s. 205(1)(c)(iii.1) of the Act.
8Under s. 47(1) of the Act, the Registrar may, by order, suspend or cancel a CVOR certificate and the plate portion of a permit on various grounds including:
(d) misconduct for which the holder is responsible, directly or indirectly, related to the operation or driving of a vehicle;
(e) conviction of the holder for an offence referred to in subsection 210(1) or (2);
(f) the Registrar having 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 this Act, the regulations and other laws relating to highway safety; or
(g) any other sufficient reason not referred to in clause (d), (e) or (f).
9Section 17(4) of the Act provides that an applicant is related to a person if at least one of the following is established:
(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, or;
(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.
10Section 47(2.1) of the Act provides that s. 17(4) applies with necessary modifications for the purpose of determining who are related persons for the purposes of s. 47(1)(f).
11Section 47.1(1) of the Act provides that before suspending or cancelling a plate portion of a permit or a CVOR certificate under s. 47(1), the Registrar must provide notice of the proposed action.
12The decision of the Registrar may be appealed to the Tribunal pursuant to section 50(1) of the Act.
13The Registrar has the burden of establishing the grounds for the Order. The Tribunal does not owe any deference to the Registrar’s decision.
14Following a hearing, the Tribunal may, under s. 50(2) of the Act, confirm, modify or set aside the Order.
Positions of the Parties
Registrar’s Position
15The Registrar’s position, consistent with the October 18, 2021 revised Notice of Cancellation, is that the appellant’s CVOR safety record indicates unacceptable performance and gives the Registrar reason to believe that the appellant may not operate commercial vehicles safely or in accordance with the Act, the regulations and other laws relating to highway safety under the Act based on the following:
A) the Carrier Safety Record Review dated September 2021;
B) the Commercial Vehicle Operating Record of the appellant;
C) the Inspection Reports for the appellant;
D) the Collision Reports of the appellant;
E) the affiliation to 2534690 Ontario Inc. o/a A Plus Towing and Float Service, Larry’s 24HR Heavy Towing and Recovery Service Inc., 2145462 Ontario Inc. o/a On Route Towing and Heavy Recovery and 1340889 Ontario Limited o/a Black Ice Towing;
F) the affiliation to Manpreet Singh Kang and the group of companies known as “On Route Group”;
G) the affiliation to 1295503 Ontario Inc. (CVOR 129-389-704), Go Trucking Ltd. (CVOR 139-903-717), 1517589 Ontario Inc. (CVOR 145-441-098) and Balbir Singh Opal (CVOR 103-036-970).
Appellant’s Position
16The appellant appealed the Order on the basis that, firstly, its safety record, and inspection and collision reports do not provide the Registrar with reason to believe that it will not operate commercial vehicles safely or in accordance with the Act, regulations or other laws relating to highway safety and, secondly, it is not affiliated with or related to Balbir Singh Opal (Opal), Manpreet Singh Kang (Kang) or any of the alleged past or present corporate entities in which those persons are or have been allegedly involved.
17The appellant also submits that it operated under its CVOR 150-874-335 without issue for some 16 years prior to the Order, was never offered any performance conditions prior to the Order being issued, and the Registrar took the excessive and unwarranted step of issuing the Order on grounds that were specious, unreasonable and clearly did not amount to reason to believe that it will not operate commercial vehicles safely or in accordance with the Act, regulations or other laws relating to highway safety. Further, the Order is unwarranted and not supported by the facts and should be set aside. Still further, the appellant submits that there has been improvement since the Order was made and that it needs its CVOR to carry on its business.
EVIDENCE AND ANALYSIS
(a) Is there reason to believe that the appellant will not operate a commercial motor safety or in accordance with the Act, the regulations and other laws relating to highway safety?
18I find that there is reason to believe that the appellant will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety for the reasons set out below.
Appellant’s Safety Record
19Travis Donohue was Senior Program Administrator, Carrier Sanctions and Investigations of the Ministry of Transportation (MTO), until December, 2021 when he retired and his position was filled by Rick Borris. Mr. Donohue testified that Mr. David Allen, the original shareholder of the appellant, telephoned him on September 29, 2021. I pause here to say that I recognize the dangers of hearsay evidence; however, section 15(1) of the Statutory Powers Procedure Act allows me to admit all evidence relevant to this case, and I assigned the weight to the hearsay evidence introduced at the hearing that I found appropriate, especially where the declarants testified before me.
20Mr. Donohue testified that Mr. Allen said that the latter had sold the appellant to Messrs. Kang and Opal. This was new information because the respondent did not know Mr. Kang was involved in the appellant and raised concerns for the respondent because Mr. Kang had been involved with other corporations whose CVOR safety records were poor.
21According to Mr. Donohue, Mr. Allen indicated that he was still in charge for another three years and that they were eight months behind in payments. Mr. Allen also told Mr. Donohue that he helps out Black Ice Towing and that he helps its dispatcher, Nick Kirkham. Mr. Donohue made a contemporaneous note to the file about what Mr. Allen had told him which was filed at the hearing.
22Mr. Donohue also testified that he attended the show cause meeting on October 21, 2021 at which Mr. Allen represented the appellant. No one attended for 1340889 Ontario Ltd. to which the Notice of Cancellation and Seizure had also been addressed and its CVOR has since been cancelled. During the show cause meeting, Mr. Allen discussed issues raised with the appellant’s safety record, including collisions, speeding convictions, and inspection reports showing out of service defects for fuel system leaking, steering issues and airline and brake issues--in several instances, Mr. Allen said the drivers were responsible. The show cause meeting did not satisfy the concerns raised by the Registrar and the Order was issued.
23Rick Borris testified that the CVOR monitoring system is in place with the goal of improving road safety. Inspections, convictions and collisions are monitored. While it is the driver who actually drives the vehicle, the CVOR certificate holder is the “operator” who is responsible for the driver, vehicle and load under the Act. Mr. Borris explained that persons whose CVOR certificates have been cancelled look for other companies to use for business.
24Mr. Borris testified that out of approximately 60,000 carriers in Ontario, 90% have an overall violation rate of below 15%. During the COVID-19 pandemic, fewer than 1,000 carriers have an overall violation rate of above 35%. To be above 35% shows that a carrier is among the worst in Ontario.
25The reasons for the respondent’s notice of cancellation are set out in the Revised Notice of Cancellation and Seizure dated October 18, 2021 which include both the safety record of the appellant and the affiliations to 2534690 Ontario Inc. o/a A Plus Towing and Float Service, Larry’s 24HR Heavy Towing and Recovery Service Inc., 2145462 Ontario Inc. o/a On Route Towing and Heavy Recovery and 1340889 Ontario Limited o/a Black Ice Towing, and the affiliation to Manpreet Singh Kang and the group of companies known as “On Route Group”, and the affiliation to 1295503 Ontario Inc. CVOR 129-389-704, Go Trucking Ltd. CVOR 139-903-717, 1517589 Ontario Inc CVOR 145-441-098 and Balbir Singh Opal CVOR 103-036-970.
26The appellant’s safety record shows several interventions by the MTO prior to 2018, specifically a 2011 warning letter, a 2012 failed audit, a 2012 conditional rating followed by a satisfactory rating, a May 2015 warning letter and a December, 2018 warning letter that was issued likely because of a poor inspection rate. The appellant had a fleet of fewer than 20 vehicles until 2019 when it increased quickly to 47 vehicles.
27The other two companies named in the revised notice of cancellation and seizure, in addition to the appellant, namely 1340889 Ontario Ltd. and Britt Motor Sales Inc., did not dispute the cancellation and their CVORs are now cancelled. Both of these cancelled corporations operated under the business name “Black Ice Towing”.
28Mr. Borris testified that the appellant’s safety record did not improve after it was sent the December 2018 warning letter indicating that further events on the appellant’s record may affect its safety rating and its privileges may be suspended or cancelled.
29Mr. Borris testified that the appellant’s CVOR record dated September 24, 2021 covers the two year period from August 26, 2019 to August 25, 2021. It shows an overall violation rate of 37.63%, 6 collisions, 10 convictions and 31 inspections resulting in an out of service rate of 27.78%. Most of the issues are driver-related such as speeding, no trip inspections, over-dimensional loads, not having proper permits or vehicle being over-height or over-width. Mr. Borris testified that these are all safety concerns with an extreme safety issue being a vehicle speeding 20 kilometers per hour over the posted speed limit.
30Mr. Borris reviewed collision reports, some of which I find are particularly concerning. On January 18, 2020, a vehicle which had been picked up by one of the appellant’s towing vehicles rolled off the appellant’s towing equipment and collided with a parked police cruiser. The same type of incident occurred on August 9, 2020 when a vehicle rolled off the appellant’s towing equipment and again collided with a police cruiser. On December 23, 2020, the vehicle completing the tow under the appellant’s CVOR slid sideways into the guardrails on the road. On August 17, 2021, one of the appellant’s towing vehicles struck another vehicle while turning right at a Highway 400 intersection.
31Inspection reports show concerning vehicle maintenance issues including a defect in a wheel bearing hub, brake chamber leaking and braking system air lines damaged. On one occasion the plates were taken off the vehicle. Mr. Borris testified that it is rare to see vehicles with multiple defects like these anymore.
32The appellant’s submission that it operated without issue for some 16 years prior to the Order is not supported by the evidence as set out above. It is clear from the appellant’s safety record that it had safety problems as early as 2011, and though corrections were made, there was relapse in 2015 and 2018.
33The vehicles coming loose after being picked up by the appellant’s towing vehicles and colliding with other vehicles (here, police cruisers) are clearly unsafe incidents. This happened twice in one year. Also, a collision where the towing vehicle collides with a guardrail on the road is clearly unsafe. Mr. Allen’s testimony that these incidents were accidents and no one was hurt is insufficient. In a towing situation, I would expect the towing vehicle to be part of a safe rescue operation, not cause further damage to other vehicles on the scene; the public should expect the same.
34Although Mr. Allen testified that there have been recent improvements in safety and in November 2021, after the show cause meeting, he had a safety plan developed, there is insufficient evidence before me that the safety plan has been significantly implemented. Any efforts the appellant has made to improve its safety rating are too little and too late. More concerningly, Mr. Allen testified that Mr. Opal and Mr. Kang--are not aware of the safety plan and are not bound by it if the purchase is completed.
35Although the appellant submitted that its CVOR record shows its carrier safety rating as satisfactory at the time of the notice of cancellation, I find that there is reason to believe, having regard to the safety record of the appellant, that the appellant will not operate a commercial motor safely or in accordance with the Act, the regulations and other laws relating to highway safety.
36This is even more so when considered in conjunction with the safety record of the persons related to the appellant and any other relevant information as set out below.
Appellant is related to Messrs. Opal and Kang and corporations
37Section 17(4) of the Act provides that an applicant is related to a person if at least one of the following is established:
(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, or;
(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.
38I find that the appellant is related to Mr. Opal, Mr. Kang and several of their corporations for the following reasons.
Section 17(4)(b)–partners; s. 17(4)(c)–direct or indirect control or management
39I find that in July 2019, the appellant, joined with Mr. Opal and one of Mr. Opal’s corporations in a financially significant lease of a trailer. Under the lease, three persons--the appellant, 1295503 Ontario Inc. and Mr. Opal--jointly leased from Riordan Leasing Inc. a 2020 Doepker quad axle flat deck trailer. The address given for the joint lessees is the appellant’s address.
40On July 15, 2019, Mr. Opal certified in writing to Riordan Leasing Inc. that he accepted delivery of the trailer in satisfactory condition on that date. The address on the delivery certification is the appellant’s address. The plate portion of the permit for the trailer shows the appellant’s address and name.
41Mr. Opal signed the lease behalf of all three joint lessees and confirmed “I have authority to bind the corporation” when signing for the appellant. Specifically, Mr. Opal signed the lease as the authorized signing officer of the appellant and the authorized signing officer of 1295503 Ontario Inc. Mr. Opal also signed the lease in his personal capacity as one of the three joint lessees, personally as guarantor, and signed as officer of 2678464 Ontario Inc., another guarantor of the lease. 2678464 Ontario Inc. is a corporation controlled or directed by Mr. Opal as established by the corporate records filed which show that he incorporated this company in January 2019 and as of April 20, 2022 is the corporation’s sole director.
42Mr. Opal signed the lease on behalf of the appellant before he became a director of the appellant on October 31, 2019, which leads me to conclude that he had direct or indirect control and management of the appellant at least as early as July 2019.
43Despite Mr. Allen’s testimony at the hearing that he manages the appellant, Mr. Allen did not sign this lease and is not referred to in the lease documents in any capacity.
44I find that this five year lease is a substantial business commitment for the appellant as it would continue until approximately July 2024 and commits the appellant to lease payments totalling some $96,780.60 during that time. Based on Mr. Opal entering into the lease personally and through his corporation 1295503 Ontario Inc., and his guarantee of that lease personally and through another of his corporations, 2678464 Ontario Inc., and the lessees’ option to purchase the trailer at the end of the term for $1.00, I find that Mr. Opal is looking forward to a continuing business relationship with the appellant for at least five years from 2019 and is willing to assume significant financial risk for the appellant.
45I also find that this leasing arrangement, when viewed in the conjunction with the other dealings between the appellant, the appellant’s sole shareholder Mr. Allen, Mr. Opal and other corporations controlled or directed by Mr. Opal, establishes that Mr. Opal directly or indirectly controlled or managed the appellant’s business in a substantial way in July 2019, and possibly earlier as a result of the 2018 share purchase agreement, and had the authority and exercised it to commit the appellant to this significant business arrangement.
46The leasing agreement is not the only basis for me to make this finding of direct or indirect control or management. Trucking operations support my finding. Further, based on the testimony of Mr. Allen, I find that the appellant, Mr. Opal and 2678464 Ontario Inc., either directly or indirectly through Messrs. Allen, Opal and Kang, or through a combination of personal and corporate involvement, control or controlled or manage or managed the others within the meaning of s. 17(4)(c) of the Act.
47After Mr. Opal incorporated 2678464 Ontario Inc., “Black Ice Towing” was registered as its business name in Ontario for five years ending January 2024. 1340889 Ontario Limited (whose CVOR is now cancelled) also used the business names “Black Ice Towing” and “On Route” according to the respondent’s records.
48Further, Mr. Allen’s statements at the show cause meeting and his testimony at this hearing establish direct or indirect control or management with Mr. Kang within the meaning of s. s. 17(4)(c).
49According to the minutes of the show cause meeting and the testimony of Mr. Donohue, Mr. Allen said at the show cause meeting that the appellant leases some eight to ten trucks from On Route and confirmed the appellant has a business relationship with On Route giving them loads and On Route giving the appellant loads.
50Mr. Allen testified at this hearing that he helped the towing companies Black Ice Towing and On Route for a period of six or seven months in 2021 when Mr. Kang was in India. Mr. Allen said he handled day to day questions and if the drivers were stuck on day to day to operations.
51Importantly, Mr. Allen testified at this hearing that the appellant was purchased on paper by Mr. Opal but Mr. Kang is Mr. Opal’s co-purchaser. Mr. Allen also confirmed that he told Mr. Donohue on September 29, 2021 that he sold the appellant to Messrs. Kang and Opal. Mr. Allen also testified that he spoke to both Messrs. Kang and Opal about the purchase, and they explained to him that both of them were buying the appellant but only Mr. Opal’s name would be on the paperwork. Mr. Allen testified that if the purchase of the appellant goes through, Mr. Opal will be the owner but Mr. Kang will be managing it.
52It is clear from the testimony of Mr. Allen that both Messrs. Opal and Kang are the purchasers of the shares of the appellant and both will be involved in directing the business of the appellant. I found the whole of Mr. Allen’s testimony is consistent with that of Mr. Donohue.
53Based on the evidence, I find that Mr. Opal and Mr. Kang directly or indirectly controlled or controls or managed or manages the appellant. With this finding in place, I may consider the information about Mr. Opal and Mr. Kang relevant to their operation of commercial vehicles safely or in accordance with the Act, the regulations or other laws relating to highway safety. The respondent relies on a prior decision of this Tribunal which cancelled Mr. Opal’s CVOR #103-036-970 and 1295503 Ontario Inc.’s CVOR #129-389-704 for safety concerns1 in 2009. That Mr. Opal is now, directly or indirectly controlling or managing the appellant gives me reason to believe that the appellant will not operate a commercial vehicle safely or in accordance with the Act, the regulations or other laws relating to highway safety.
54Mr. Kang is a corporate officer of 2301163 Ontario Limited operating as J & S Truck (CVOR 172-425-995) and 1857066 Ontario Inc. (CVOR 173-059-374), both of which CVORs were cancelled for unsatisfactory safety records in 2014 and 2015 respectively.
55The Registrar had reason to believe that the involvement of Mr. Kang and/or corporations controlled by him may adversely affect the safety rating of the appellant. Records filed by the Registrar establish that Mr. Kang and the “On Route Group” of companies including 2534690 Ontario Inc. o/a A Plus Towing and Float Service, Larry’s 24HR Heavy Towing and Recovery Service Inc., 2145462 Ontario Inc. o/a On Route Towing and Heavy Recovery and 1340889 Ontario Limited o/a Black Ice Towing have safety records that are concerning.
Section 17(4)(d)-common officers or directors, or direct or indirect control by same shareholders
56The evidence establishes that the appellant and 2678464 Ontario Inc. had a common director – Mr. Opal. A letter dated October 27, 2021 from Mr. Allen’s lawyer confirms that 2678464 Ontario Inc. required Mr. Allen to make “its nominees…the director and signing officers” for the appellant. Mr. Allen, as shareholder of the appellant, elected Mr. Opal as the sole director of the appellant for a period of some two years from 2019 to 2021. Mr. Opal is also shown on the corporate profile report of 2678464 Ontario Inc. as its sole director starting January 2019 and continuing as of April, 2022. When Mr. Opal was removed as a director on November 25, 2021, Mr. Allen replaced Mr. Opal as the sole director of the appellant.
57The appellant does not dispute these facts but suggests that Mr. Opal was appointed as part of the appellant’s bankruptcy proceedings and later removed by Mr. Allen in an attempt to allay concerns of the respondent. Mr. Borris testified that this did not resolve the respondent’s concern that Mr. Opal had oversight of the appellant.
58Neither Mr. Opal nor Mr. Kang testified at the hearing.
59I find that Mr. Opal was the sole director of the appellant during the time that the appellant was involved in collisions and convictions which are described above, including speeding 20 kilometers per hour over the posted speed limit and allowing towed vehicles to collide with parked police cruisers. As its sole director, Mr. Opal was responsible to make sure that the appellant operated safely and in accordance with the law and the evidence establishes that he failed to do so.
60Further, although Mr. Allen testified that he has put forward a plan to improve the appellant’s safety record, he admitted in cross-examination that Messrs. Opal and. Kang are not involved in the safety plan and have no idea such a safety plan has been created. Mr. Allen testified that he assumes they would continue with the safety plan but admitted that continuing with the plan would be up to them as he would be resigning if the purchase is completed.
61Mr. Opal’s company 2678464 Ontario Inc. agreed to buy all of the appellant’s issued shares from the sole shareholder Mr. Allen in an agreement dated March 18, 2019 for $1,500,000.00 signed by Mr. Allen, Mr. Allen as President of the appellant and Mr. Opal as president of 2678464 Ontario Inc. Although the closing date of the purchase is June 1, 2023, the agreement states that a deposit of $100,000.00 was paid, and the purchase price is payable in 60 monthly payments, including interest, of $19,525.75. The assets of the appellant are agreed to include all of the business undertakings, assets and equipment of the appellant being operated as a going concern including the appellant’s “licenses” and all “leased equipment…vehicles” as at the “effective date” of June 1, 2023.
62By agreement dated March 31, 2019, Mr. Opal’s company 2678464 Ontario Inc. agreed to lend Mr. Allen $500,000.00 on April 1, 2019, monthly payments of $19,525.75 every month from May 1, 2019 until April 1, 2024 and a “working capital calculation” on April 1, 2024. The agreement provides that the recourse of the lender, Mr. Opal’s company 2678464 Ontario Inc., is limited to “seizing and foreclosing” upon the Mr. Allen’s shares in the appellant. Mr. Allen testified that he also pledged his shares in the appellant as security for this loan from 2678464 Ontario Inc. pursuant to the unsigned share pledge agreement filed by the appellant.
63Mr. Allen, the appellant and Mr. Opal’s company 2678464 Ontario Inc. entered into business agreements containing specific and detailed arrangements about the business and finances of the appellant.
64For example, the October 15, 2019 agreement between Mr. Allen, the appellant and 2678464 Ontario Inc. o/a Black Ice Towing recites that by October 15, 2019, 2678464 Ontario Inc. advanced $539,051.50 to Mr. Allen as “Working Capital Calculation as set out in the Share Purchase Agreement” dated March 18, 2019 with respect to the purchase by 2678464 Ontario Inc. and the sale by Mr. Allen of all the appellant’s issued and outstanding shares. In the October 2019 agreement 2678464 Ontario Inc. agrees to lend $119,704.89 to David Allen to cover the appellant’s “doubtful accounts” in the amount of $119,704.89 and to advance to Mr. Allen pursuant to the Allen Loan Agreement $480,000.00 and $291,792.50. Mr. Allen testified that in total, he has received over $1,000,000.00 or approximately two-thirds of the share purchase price from the purchasers of the shares, Messrs. Opal and Kang.
65By the terms of the October 2019 agreement Mr. Allen is required by Mr. Opal’s company 2678464 Ontario Inc. to pay, by October 25, 2019, the total sum of $452,211.39 of the above funds advanced by Mr. Opal’s 2678464 Ontario Inc. to the Canada Revenue Agency (CRA) on account of the appellant’s HST and source deductions up to June, 2019. In my view, this establishes that Mr. Opal is controlling or directing or managing the business of the appellant in a substantial way through his dealings with its president Mr. Allen, the advance of substantial funds to Mr. Allen personally with the proviso that specific business debts of the appellant be paid by a certain date. Mr. Opal’s company 2678464 Ontario Inc. required the funds to be deposited to the trust account of Mr. Allen’s solicitors who are charged with paying the debts to CRA directly. The agreement also provides that Mr. Allen will make the CRA payments as shareholder loans to the appellant and transfer those shareholder loans to as of October 25, 2019 to Mr. Opal’s company 2678464 Ontario Inc.
66The requirements and restrictions regarding this advance of funds agreed to by Mr. Opal’s company 2678464 Ontario Inc., the appellant and Mr. Allen tend to indicate that Mr. Opal, through his company 2678464 Ontario Inc., is protecting his investment in the purchase of the appellants shares and also may be protecting himself as a future director of the appellant. It is common knowledge in business that directors can be personally responsible to CRA for HST and unpaid source deductions of a corporation, including s. 227.1(1) of the Income Tax Act, R.S.C. 1985, c.1, as amended, and s. 323(1) of the Excise Tax Act, R.S.C. 1985, c.E-15, as amended. Mr. Opal did not testify at the hearing to establish otherwise or to shed any light on these agreements or his business dealings with the appellant or Mr. Allen.
67The October 2019 agreement provides for the continued employment of Mr. Allen by the appellant until June 1, 2023 but does not give him the right to continue to be a director of the appellant. Approximately two weeks later on October 31, 2019, Mr. Opal became a director of the appellant and continued in that role for some two years.
68Taken as a whole, I find that the evidence before me establishes that through a web of business and legal relationships involving partnerships, direct or indirect control or management, common officers or directors, or direct and indirect control by same shareholders, the appellant is related to Mr. Opal, corporations controlled by him, and also related to Mr. Kang and corporations controlled or directed by him.
69I find that this gives the Registrar reason to believe, having regard to the safety records and cancelled CVORs of Mr. Opal, 1295503 Ontario Inc., Go Trucking Ltd. and 1517589 Ontario Inc. and the safety records of the On Route Group of companies, including 2534690 Ontario Inc. o/a A Plus Towing and Float Service, Larry’s 24HR Heavy Towing and Recovery Service Inc., 2145462 Ontario Inc. o/a On Route Towing and Heavy Recovery and 1340889 Ontario Limited o/a Black Ice Towing, that the appellant will not operate a commercial motor vehicle safely or in accordance with the Act, the regulations and other laws relating to highway safety.
Section 47(1)(f)-any other relevant information
70Even if I am wrong in my findings relevant to the application of s. 17(4) of the Act, I find that the facts set out above give 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 this Act, the regulations and other laws relating to highway safety within the meaning of s. 47(1)(f) of the Act
71Although the appellant submits that the Registrar took the excessive and unwarranted step of issuing the Order on grounds that were specious, unreasonable and clearly did not amount to reason to believe that the appellant will not operate vehicles safely or in accordance with the Act, regulations or other laws relating to highway safety, I disagree. Based on the facts as I have found them, there is ample reason to believe that the appellant will not operate vehicles safely or in accordance with the Act, regulations or other laws relating to highway safety based on the safety record of the appellant, taken in totality with the evidence of the intertwined financial and business relationships of the appellant, Messrs. Allen, Opal and Kang and corporations directed by them.
72The appellant became reliant on Messrs. Opal and Kang and the funds they supplied personally or through corporations directed by one and/or both of them. The MTO cancelled Mr. Opal’s personal CVOR certificate and those of several corporations that he directed or controlled.
73I find unpersuasive the appellant’s submission that there has been improvement since the Order was made, the recent improvements are not enough and are too little, too late.
74Although the appellant submits that it was never offered any performance conditions prior to the Order being issued, I find that the Registrar is under no obligation to do so.
75For the same reasons, I find unpersuasive the appellant’s submission that the Order is unwarranted and not supported by the facts and should be set aside.
(b) What is the appropriate outcome?
76I find that the Order is the appropriate outcome and decline to modify the Order for the reasons set out below.
77I have considered the appellant’s submission that it needs its CVOR to carry on its business and found this to be unpersuasive. Safety of the roads which the public shares with commercial vehicles is more important than the personal matters of either the appellant or Mr. Allen.
78The appellant also submitted at the hearing that if the sale of the appellant does not close in 2023, it will be left with a towing company that cannot operate. While this could occur in the future, if it does, it is a difficulty created by the appellant and Mr. Allen. This was a risk that Mr. Allen and the appellant assumed when the appellant and/or its shareholder Mr. Allen accepted more than $1,000,000.00 from or behalf of Mr. Opal, elected Mr. Opal a director, Mr. Allen agreed to sell his shares in the appellant to Messrs. Opal and Kang and Mr. Allen agreed to manage the businesses of Messrs. Opal and Kang in 2021. I also note that there are no documents or testimony in evidence before me that support Mr. Allen’s assertion that the purchasers of the shares are behind in payments.
ORDER
79For the reasons set out above, I confirm the Order and decline to modify the Order by the imposition of conditions or a lesser penalty.
Licence Appeal Tribunal
Avril A. Farlam, Vice-Chair
Released: September 21, 2022