James Michalopoulos v. Registrar, Motor Vehicle Dealers Act, 2002, 2023 CanLII 17688

Licence Appeal Tribunal

Date: 2023-02-27 File: 14372/MVDA

An appeal from a Notice of Proposal by the Registrar, Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B. to Refuse Registration

Between:

James Michalopoulos Appellant

-and-

Registrar, Motor Vehicle Dealers Act, 2002 Respondent

DECISION AND ORDER

ADJUDICATOR: Jeffery Campbell, Vice Chair

APPEARANCES:

For the Appellant: James Michalopoulos, Appellant

For the Respondent: Michael Rusek, Counsel

Heard by videoconference: February 6, 7 & 8, 2023

OVERVIEW

1On February 3, 2022, James Michalopoulos (the ‘Appellant’) applied for registration as a motor vehicle salesperson under the Motor Vehicle Dealers Act, 2002 (the ‘Act’). On October 9, 2022, the Registrar, Motor Vehicle Dealers Act, 2002 (the “Registrar”) issued a Notice of Proposal to Refuse Registration of the Appellant as a motor vehicle salesperson pursuant to subsection 6(1)(a)(ii) of the Act, alleging that his past conduct afforded reasonable grounds for belief that he will not carry on business in accordance with law and with honesty and integrity. On October 24, 2022, the Appellant appealed the Notice of Proposal to the Licence Appeal Tribunal (the ‘Tribunal’).

BACKGROUND

2The Appellant was previously registered as a motor vehicle salesperson under the Act until January 5, 2018, at which point his registration expired due to his no longer being employed by a sponsoring registered motor vehicle dealer as is required by the Act.

3The Appellant applied for the reinstatement of his motor vehicle salesperson registration in March 2019. This application was refused by the Registrar on the grounds that there were reasonable grounds for belief that he would not carry on business in accordance with law and with integrity and honesty. In particular, the Registrar alleged that Mr. Michalopoulos acted as a dealer without registration, engaged in unfair practices, and furnished false information with respect to a 2015 transaction involving a 2009 Mazda Tribute (the “Mazda”), and a 2018 transaction involving a 2017 Dodge RAM (the “Dodge”).

4The Appellant appealed to the Tribunal, which subsequently confirmed the Registrar’s decision to refuse the Appellant’s application for registration. The Decision, cited as 2020 CanLII 12705 (ON LAT), triggered the two-year statutory waiting period until the Appellant could reapply for registration. As a prerequisite to reapplying for registration, Section 15 of O. Reg. 333/08 made under the Act requires a person who has been refused registration to wait two years before applying again and that there be new or other evidence available or that it is clear that material circumstances have changed.

5It is agreed that two years has passed since the previous refusal. The Appellant submits that new and other evidence which allows him to reapply for his registration. The Registrar takes the position that there is no new evidence available and that it is not clear that material circumstances have changed.

ISSUES

6There are three issues before the Tribunal.

a. Is there new or other evidence available, or is it clear that the Appellant’s material circumstances have changed?

b. If so, then has the Registrar proven that the past conduct of the Appellant affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty.

c. If I find that the Appellant’s conduct provides reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty, I must consider whether it is appropriate for the Tribunal to substitute its opinion for that of the Registrar and order the registration of the Appellant with terms and conditions.

RESULT

7The Registrar is not to carry out its proposal to refuse registration, but, rather, to register the Appellant as a motor vehicle salesperson subject to conditions.

ANALYSIS

A. I find that the Appellant has presented new or other evidence which allowing him to apply for registration.

8According to the Act, an applicant whose license has been previously refused, is limited to the following criteria

s. 12. A person whose registration is refused, revoked or refused renewal may reapply for registration only if,

(a) the time prescribed to reapply has passed since the refusal, revocation or refusal to renew; and

(b) new or other evidence is available or it is clear that material circumstances have changed.

9The Registrar admits that the Appellant did wait until the prescribed time for reapplication had passed.

New or Other Evidence

10The Appellant testified that, since the 2020 Tribunal Decision, he has undergone the application process for and has obtained licencing with the Financial Services Regulatory Authority (“FSRA”) as a mortgage dealer and is now employed as a mortgage agent with Capital Mortgages Inc. He submitted a reference letter (“Capital Letter”) from Wendy Mason (“Ms. Mason”), Director, Broker Development, dated December 16, 2022.

11The Appellant has also rejoined the Canadian Armed Forces (the “CAF”) as an Avionic Technician with a Secret Level 2 Clearance. As the Appellant had resigned from the CAF in 2006, it was necessary for him to undergo the original application and vetting process as opposed to a simple renewal process. He submitted a reference letter (“Major Keefe letter”) from Major Trevor S.V. Keefe (“Major Keefe”), dated December 14, 2022.

12The Appellant testified that he has also undergone therapy with a social worker in the CAF.

13The Registrar argues that the Appellant’s evidence with respect to his entry into the financial services industry is not ‘new or other’ as the 2020 LAT Decision previously considered that the Appellant had been involved in a highly regimented and regulated industry.

14The Registrar further submitted that the Appellant’s rejoining the CAF with a Secret Level 2 clearance should also not be considered as new evidence, as this was considered by the Tribunal in its previous Decision.

15It is clear that the Adjudicator in the previous Tribunal decision did consider the Appellant’s involvement in both the military and in a regulated industry in his ability to be “law abiding and financially responsible”, assessing his credibility in the light of past conduct. However, in my view, the introduction of the Appellant’s entrance into the financial services industry and re-entrance into the military is new evidence in that it speaks to his activities since the LAT Decision of 2020. This is more than a subtle nuance. This evidence speaks to the Appellant’s state of mind and initiative since the previous Decision, as well as the reality of his acceptance and re-acceptance into two highly regulated environments despite being previously denied registration with OMVIC.

16I therefore find that the evidence regarding the FSRA licence, the evidence regarding re-acceptance into the CAF and the testimony of the Appellant of receiving regular therapy all to be new or other evidence.

17Having found that the Appellant has tendered new and other evidence, it is unnecessary to consider whether there has been a change in material circumstances. The Appellant is therefore eligible to reapply for registration under the Act.

B. I find that there are reasonable grounds for belief that he will not carry on business in accordance with the law and with integrity and honesty

18The Registrar bears the burden of proving that the past conduct of an appellant affords reasonable grounds for belief that the appellant will not carry on business in accordance with law and with integrity and honesty. The standard of proof is "reasonable grounds for belief", which is a lower standard of proof than proof on a “balance of probabilities”: See Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon's), 2013 ONCA 157 (“Flesh Gordon’s”).

19In the Flesh Gordon’s case, the Court of Appeal for Ontario articulated that there must be reasonable grounds for belief that the person will, in future, carry on activity in a way that is contrary to the public interest and will not act in accordance with the law, with honesty and with integrity. It emphasized that any and all past or present conduct can and should be considered. In this case, all of the allegations against the appellant arise in the context of trading in used vehicles, thus establishing the link between past conduct and the proposed business of the appellants.

20The Registrar submits that the Appellant’s past conduct which led to the previous Tribunal Decision is significant and egregious and that the Appellant minimizes and downplays his past poor conduct.

21With respect to the Mazda transaction, the Tribunal found that the bill of sale contained “significant false and inaccurate information” and that Mr. Michalopoulos’ “failure to obtain and disclose information about the Mazda’s past history resulted in the [purchasers] purchasing a vehicle that I find very likely they would not otherwise have bought.”

22Regarding the Dodge transaction, the Tribunal found that the bill of sale did not accurately represent the agreed upon terms of the agreement, resulting in confusion on the amount that the customer was provided for her trade-in. The Tribunal found that the customer was vulnerable and that she “honestly believed that she was purchasing the Dodge for one amount and later found out that she had agreed to pay almost double that amount.”

23The Tribunal noted:

Michalopoulos failed to comply with various provisions of the Act and regulations. That non-compliance, and particularly his conduct in acting as an unregistered dealer or salesperson and in falsifying and furnishing false information, impacted the consumers on the Mazda and Dodge transactions in important ways. This was conduct that was dishonest, and it brings into question the very integrity of the regulatory scheme.

24In addition to those transactions, in 2019 the Appellant was charged with 6 counts under the Act as well as the Consumer Protection Act (the “CPA”) with respect to the Mazda transactions. Those charges are the subject of trial, scheduled for March, 2023. The Appellant has also pleaded guilty to 3 counts under the Act and the CPA with respect to the Dodge transactions.

25The Registrar further points to false statements that the Appellant included in an application for FSRA registration, in which the Appellant failed to advise FSRA that he had had a previous denial of a registration.

26The Appellant testified as to changes that he has made in his personal life since the previous Tribunal Decision. He has “come to terms with a very challenging divorce with my ex-wife and child custody.” He advised that he is constantly striving “to be a good example to [his] kids and show them how to be an honorable person.” He also relies upon character letters from Wendy Mason, Director for Broker Development at his present employer Capital Mortgages, from Major Keefe of the CAF and from Jourdan Lagace, the president of his sponsoring dealer, Car City. Each of these letters speaks highly of the Appellant.

Regarding the FSRA application, the Appellant advised that his failure to advise of a previous denial of registration was on the first of two applications, and that he voluntarily advised the FSRA of that oversight and corrected it.

27However, I agree in this case with the Registrar. The past conduct which led to the previous Tribunal decision was serious and intentional. Also, the disposition of the trial regarding the charges arising from the Mazda issues have yet to be determined.

28Based upon the Appellant’s conduct prior to the previous Tribunal decision, I find that the Registrar has established that there are reasonable grounds for belief that he will not carry on business in accordance with the law and with integrity and honesty.

C. Is it appropriate for the Tribunal to substitute its opinion for that of the Registrar?

29While the Appellant’s conduct prior to the previous Tribunal decision establishes reasonable grounds for belief that he may not carry on business in accordance with law and with integrity and honesty. I nevertheless find, based upon the Appellant’s subsequent conduct, that this is a situation where adequate conditions will serve the purpose of consumer protection for the following reasons.

30Firstly, the Appellant has acknowledged the conduct leading to the denial of registration by the Tribunal and the charges stemming from the Dodge and Mazda transactions. While the Registrar points to the Appellant’s description of those transactions as sloppy (a description used, in fact, by the Tribunal), I accept his evidence that he is remorseful for his past conduct and recognizes that he has caused harm to those involved.

31Secondly, there has been no indication of wrongdoing in his present employment with either Capital Mortgages or the CAF.

32Thirdly, the Appellant has agreed to adhere to whatever conditions may be imposed. I listened very carefully to his testimony at the hearing and based on what I heard, I found him to be sincere in this regard.”

33I find that refusal of registration is not the appropriate result. Comprehensive conditions including continued OMVIC educational training and enforced supervision, is necessary in this instance and sufficient to ensure the appellant’s compliance with the Act and protect the public interest. For that reason, I am imposing conditions on his registration.

ORDER AND DECISION

34Pursuant to section 9(5) of the Act, the Tribunal orders the Registrar to not carry out its proposal to refuse registration. The Tribunal substitutes its opinion for that of the Registrar and orders that James Michalopoulos be registered as a motor vehicle salesperson subject to the following conditions:

1. The Appellant shall ensure that any sponsoring dealer and individuals are informed of these conditions to the extent necessary to ensure compliance with these conditions.

2. The Appellant shall comply with all requirements of the Motor Vehicle Dealers Act 2002 (the “MVDA”) and Ontario Regulation 333/08, the Code of Ethics in Ontario Regulation 332/08, the Ontario Motor Vehicle Industry Council (“OMVIC”) Standards of Business Practice, 2010 and OMVIC Guidelines, as may be amended from time to time.

3. The Appellant shall not act as a salesperson on behalf of any dealer other than the Applicant’s sponsoring dealer.

4. The Appellant shall not transfer his registration as a salesperson to another dealer without having first obtained prior written consent of the Registrar, which will not be unreasonably withheld.

5. The Appellant shall not conduct business with any person acting as a motor vehicle dealer and trading in motor vehicles without first confirming that the person is registered as a motor vehicle dealer.

6. The Appellant shall provide the Registrar with notice in writing, within five days, of any substantive changes to his role with his sponsoring dealer or information provided in obtaining his registration, pursuant to section 31 of Ontario Regulation 333/08.

7. The Appellant shall enrol in the Ontario Motor Vehicle Industry Council Automotive Certification Course (“Certification Course”) and be responsible for all fees in relation to enrolment. The Appellant shall successfully pass the Certification Course by August 31, 2023, and shall provide confirmation of such to the Registrar.

8. For a period of four (4) years from the date of this Order, the Appellant shall not be a partner, shareholder, officer, director, owner, bank signing authority, or controlling mind of any dealer; nor shall the Applicant provide funds or act as an investor in relation to any dealer.

9. For a period of two (2) years from the date of this Order, the Appellant shall not act as a person-in-charge, which includes primary responsibility for the day-to-day activities and primary responsibility for ensuring compliance with the MVDA and its Regulations, on behalf of any dealer.

10. The Appellant agrees to be registered as a salesperson and shall not apply to be a dealer for a period of at least four (4) years.

11. The Appellant shall ensure that his registration will not be used to trade in motor vehicles where the Applicant knows, or ought to know, that it could facilitate an illegal or unethical practice.

12. The Appellant shall forthwith comply with any reasonable requests for information, made on behalf of the Registrar.

13. The Appellant shall forthwith provide any sponsoring dealer with notice, in writing, of any charges, offences, findings of guilt, convictions or pending charges. The Appellant shall forthwith provide the Registrar with a copy of the notification acknowledged by the signature of the sponsoring dealer.

14. The Applicant shall provide the Registrar with full and complete disclosure in all future correspondence and on all future applications, regardless of whether or not disclosure has been made previously to the Registrar.

15. The Registrar may take further administrative action, including a proposal to suspend or revoke registration, arising from any matters that have occurred or may occur related to honesty and integrity, financial responsibility or compliance with these conditions.