Tribunals Ontario Licence Appeal Tribunal

Tribunaux décisionnels Ontario Tribunal d'appel en matière de permis

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:

13401774 Canada Inc.

Appellant

and

Registrar of Motor Vehicles

Respondent

DECISION AND ORDER

ADJUDICATOR: Jeffery Campbell, Vice-Chair

APPEARANCES:

For the Appellant: Kayona John, Representative

For the Respondent: Patrick Moore, Counsel Sherry Werner, Representative

Heard by Videoconference: January 30, 2024

REASONS FOR DECISION AND ORDER

BACKGROUND

113401774 Canada Inc. (the “Appellant”) appeals the Order from the Registrar of Motor Vehicles (the “Registrar”) issued on October 5, 2023 to cancel Commercial Vehicle Operator’s Registration (“CVOR”) certificate #207-982-983, and to seize the plate portion of any permits and number plates registered to the appellant (“the Order”). The Registrar alleges that the safety records of the appellant and certain related entities justify the Order.

2The Registrar issued the Order pursuant to ss. 47 and 47.1 of the Highway Traffic Act, 1990, c. H.8 (the “Act”).

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 vehicle 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 modify the Order by the imposition of conditions.

LAW

6Under s. 47(1) of the Act, the Registrar may, by order, suspend or cancel a CVOR certificate and the plate portion of a permit 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 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;

(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 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).

9The Registrar and the Tribunal are required under s. 47(1)(f) to have regard to the safety record of the Appellant when determining whether the Appellant’s CVOR certificate ought to be cancelled. The Tribunal owes no deference to the Registrar in arriving at its decision.

10According to the Court of Appeal in Registrar, Alcohol and Gaming Commission of Ontario v. 751809 Ontario Inc. operating as Famous Flesh Gordon’s, 2013 ONCA 157, once the relevant facts are established, the issue is whether those facts afford reasonable grounds for belief that the business will not be carried on in accordance with the law and with integrity and honesty.

11The “reasonable grounds to believe” standard requires something more than mere suspicion but less than proof on a balance of probabilities. In other words, the Registrar does not have to show that the conduct of the appellant makes it more likely than not that they will not carry on business as required. The Registrar need only show that there are reasonable grounds for belief that they will not operate a commercial motor vehicle safely or in accordance with the Act.

12According to the Supreme Court of Canada in Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40 at para. 114, reasonable grounds for belief 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.

13Further, there must be a nexus between the past conduct in issue and the appellant’s ability to operate a commercial motor vehicle safely: see CS v Registrar, Real Estate and Business Brokers Act, 2002, 2019 ONSC 1652 (Div. Ct.) at para. 32.

EVIDENCE AND ANALYSIS

a) There is reason to believe that the Appellant will not operate a commercial motor safely

14The Registrar has established that there is 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.

15The evidence shows that the appellant was incorporated on October 5, 2021 and received its CVOR certificate on March 28, 2022. Ms. Kayona John is the sole shareholder of the appellant.

16The Registrar has based the Order on the following 2 reasons:

a. The safety record of the Appellant, and

b. The safety records of Degeneral Management Inc. and Degeneral Trucking Services Inc. (collectively, “Degeneral”) and DGMS Management Services Inc. (“DGMS”), which companies are related to the Appellant.

The Safety Record of the Appellant

17Sherry Werner, Senior Program Administrator for the Ministry of Transportation, testified on behalf of the Registrar. Ms. Werner gave evidence with respect to the CVOR monitoring system and the historical performance of the appellant in relation to that system.

18Ms. Werner explained that each carrier (a person or corporation responsible for the operation of a commercial motor vehicle) is assigned a threshold number of points based upon the number of kilometres the operator is expected to travel in a twelve-month period. This threshold number is then combined with a violation rate (based upon collisions, inspections and convictions of the operator in the past 24 months) to produce an overall percentage violation rate (“OVR”). The higher the violation rate, the more concerning it is to the Registrar.

19Ms. Werner testified that when an OVR reaches 35%, a warning letter is issued to the carrier advising that the carrier is required to take corrective action. As the OVR increases, the Registrar will implement other interventions with the carrier. Ms. Werner testified that 98.39% of carriers are under a 35% OVR and only 0.16% of carriers are over 70% OVR.

20Ms. Werner referred to a Commercial Vehicle Operator Record (the “Record”) of the appellant, dated July 31, 2023, which shows the appellant’s OVR to be 21.27%. Ms. Werner advised that this is based upon the appellant’s period of operation of approximately 16 months since the appellant received its CVOR on March 28, 2022. With respect to the appellant’s OVR, Ms. Werner advised that she is concerned as the inspection violation rate has been climbing since the Record was produced, although no evidence was presented with respect to that increasing violation rate.

21Ms. John, speaking for the appellant testified that, since a show-cause meeting with the Registrar on September 18, 2023, she has taken steps to improve the appellant’s safety record. Since that show-cause meeting, Ms. John advised that she has provided an action plan outlining actions that the appellant will implement in order to improve its safety record.

22Ms. Werner testified that it is her view that the action plan is insufficient in that it is too general and provides few details and dates regarding steps that the appellant will implement.

23Although expressing some reservations about the appellant’s action plan, Ms. Werner testified that the Registrar’s primary concern is not that of the appellant’s safety record, but of the safety record of a person related to the appellant. Upon questioning, Ms. Werner testified that, absent the concern of the record of the related person, the Order would not have been issued.

24I am of the same mind as Ms. Werner in this regard. I find that the safety record of the appellant is not, in itself, sufficient to establish reasonable grounds 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. Notwithstanding Ms. Werner’s previous concern that the appellant’s OVR is rising, I have no evidence before me to that effect. I find that the appellant’s OVR rating from July 31, 2023 of 21.27% does not, in itself, justify the Order.

The Safety Record of Related Persons

25As noted, the Related Persons in this matter are Degeneral and DGMS. The Registrar submits a number of links between those entities and the appellant.

Degeneral

Degeneral Management Inc.

26The Registrar presented a Cancellation and Seizure dated March 28, 2018 which revealed that Degeneral Management Inc.’s CVOR certificate # 180-956-837 was canceled after it had failed to comply with a condition imposed on November 3, 2016, due to an OVR of 127.43%. This cancellation of the CVOR certificate was also verified by a Ministry of Transportation (“MTO”) Carrier Record which showed that Degeneral Management Inc.’s CVOR certificate was canceled. The Registrar also presented a Federal Corporation Search which revealed that Degeneral had been dissolved as a corporation by the Federal Government for non-compliance on June 25, 2017.

27Both the MTO Carrier Record and the Federal Corporation Search revealed that Mr. Dillion Bovell had been a director of Degeneral Management Inc.

Degeneral Trucking Services Inc.

28The Registrar presented evidence that, following the dissolution of Degeneral Management Inc., Degeneral Trucking Services Inc. applied for a CVOR certificate. This application was refused by the Registrar as it determined that there was a link between Degeneral Management Inc. and Degeneral Trucking Services Inc.

29The Registrar presented a Federal Corporate Search which revealed that Dillion Bovell was a director of Degeneral Trucking Services Inc.

DGMS

30The Registrar presented a Federal Corporate Search of DGMS which showed that it was incorporated on May 18, 2018. An MTO Commercial Vehicle Operator Record showed that DGMS had received its CVOR certificate on June 18, 2018. That same Record revealed an OVR of 82.86% which prompted the Registrar to issue a Notice of Cancellation and Seizure to DGMS. After a show-cause meeting of February 11, 2021, a Cancellation and Seizure Order was issued to DGMS on March 21, 2021.

31DGMS appealed the Cancellation and Seizure Order to the Tribunal. In its decision dated October 5, 2021, the Tribunal did not confirm the Cancellation and Seizure Order, but did impose conditions, one of which being a fleet limitation to eight vehicles: see DGMS Management Services Inc. v. Registrar of Motor Vehicles, 2021 CanLII 140962 (ON LAT).

32On July 6, 2022, DGMS received a further Notice of Cancellation and Seizure due to an OVR of 87.51%. Following a show-cause meeting on July 25, 2022, the Ministry of Transportation imposed a Fleet Limitation Order to DGMS on September 6, 2022, limiting DGMS to a fleet of four vehicles from September 19, 2022 to September 19, 2023. The Fleet Limitation Order contained the VINs of the vehicles allowed to operate.

33On August 28, 2023, DGMS received a third Notice of Cancellation and Seizure due to, among other issues, an OVR of 95.4%. A Carrier Safety Record Review dated August 24, 2023 revealed that DGMS had transferred four vehicles to the appellant on January 3, 2023. The four vehicles transferred to the appellant were attached to the Fleet Limitation Order of September 6. 2022.

34Federal Corporate Search showed that Dillion Bovell was a director of DGMS. A Federal Corporate search of 13401774 Canada Inc. revealed that, Dillion Bovell was also a director of the appellant.

35The Certificate of Incorporation of the appellant dated October 5, 2021 also revealed Dillion Bovell as a director of the appellant although the appellant’s Application for CVOR Registration dated November 23, 2021 did not list him as a director.

36The Registrar also presented a Certificate of Automobile Insurance for the appellant for the period of March 28, 2023 to November 8, 2023, which showed Dillion Bovell as a driver as well as three others who the Registrar has shown to be DGMS drivers by way of Collision and Inspection Reports.

The Appellant’s position regarding the related companies

37Ms. John, speaking on behalf of the appellant, testified that she and Dillion Bovell had been in a relationship before, during and after the transfer of the vehicles from DGMS to the Appellant. She testified that Dillion Bovell owed her $80,000.00 which he was unable to pay.

38Ms. John testified that Mr. Bovell offered to transfer four vehicles to her corporation (the Appellant) as payment of the loan. He offered to assist her in setting up and operating the appellant as a trucking company. As Ms. John had been desiring to become an entrepreneur, she agreed to the arrangement with Mr. Bovell.

39Ms. John testified that shortly after the transfer of the vehicles in January 2023, she was out of the country for a number of months, and trusted Dillion to operate the appellant’s trucking business.

40On August 24, 2023, the appellant was issued the Notice of Cancellation and Seizure from the MTO. The Notice included:

“The reasons supporting the proposed action are as follows:

1. The safety record of 13401774 Canada Inc.

2. It is the opinion of the Registrar that an affiliation exists between 13401774 CANADA Inc. and DEGENERAL MANAGEMENT INC. (CVOR 180-956-837) and DGMS MANAGEMENT SERVICES INC. (CVOR 194-347-220)”

41A show-cause meeting was scheduled for September 18, 2023. Ms. John testified that it was not until that show-cause meeting that she became aware of the OVR of DGMS, the DGMS fleet restriction and how the appellant’s association with DGMS is detrimental to the appellant’s business.

42Ms. John testified that, since the show-cause meeting, she has severed all personal and professional relationships with Dillion Bovell. She testified that he is no longer a director of the appellant.

Position of the Registrar

43The Registrar submits that the links between DGMS and the appellant are numerous. The Registrar submits that DGMS’ OVR is very concerning. It also submits that the transfer of the vehicles from DGMS to the appellant were in violation of the Fleet Restriction of DGMS, pursuant to s. 47.1(4) of the Act. The Registrar submits that the transfer of the four vehicles was facilitated in order continue operating those vehicles under a separate entity.

Position of the Appellant

44Ms. John submits that she was not aware of the problems with DGMS until the show-cause meeting and has taken steps to separate herself from Dillion Bovell and DGMS. She submits that she has hired new drivers and is endeavouring to improve the OVR of the appellant.

CONCLUSION

45It is apparent from the evidence that DGMS’s OVR is unacceptably high (94.5% as of August 28, 2023). It is also apparent that the links between DGMS and the appellant are numerous, including, but not limited to:

a. Dillion Bovell’s directorship on both entities;

b. The transfer of the vehicles from DGMS to the Appellant;

c. The use of DGMS drivers;

d. Dillion Bovell’s management of the Appellant in Ms. John’s absence; and

e. Ms. John’s personal relationship with Dillion Bovell.

46Considering the above, I conclude that DGMS is a person related to the appellant pursuant to s. 17(4) of the Act. In considering the safety record of DGMS, particularly its increasing OVR, I conclude that the Registrar has, by virtue of the appellant’s relationship with DGMS, established reasonable grounds that the appellant that will not operate a commercial motor safely or in accordance with the Act, the regulations and other laws relating to highway safety.

b) The appropriate outcome is the imposition of conditions

47With respect to the appropriate order, I am mindful of the Tribunal’s obligation to consider the possibility of an outcome other than the cancelling of the appellant’s CVOR certificate and the seizing of the plate portion of any permits and number plates (see Joshi v. Superintendent, 2016 ONSC 4477 paragraphs 13 & 14).

48As noted above, the safety record of the appellant does not, at least at this time, give rise to the conclusion the appellant will not operate in accordance with the Act. The concern is the appellant’s relationship with DGMS.

49It is apparent from Ms. John’s testimony that she was not aware of the restrictions placed on DGMS by the MTO and, therefore, was not aware of Mr. Bovell’s possible motivation in transferring the vehicles to the appellant as an effort to circumvent the fleet restrictions placed on DGMS. I found Ms. John’s testimony to be honest and forthright and, while she may have been naïve and overly trusting, I do not conclude that she was an accomplice in the possible scheme that DGMS was engaging in.

50Given the above, I find that the imposition of appropriate conditions governing the relationship between the appellant and DGMS would be sufficient in addressing the public safety considerations of the Act.

ORDER

51Pursuant to s. 50(2) of the Act, I modify the Order as follows:

1. The Appellant’s CVOR certificate is not cancelled, nor are any of the plate portions of the Appellant’s vehicle permits or their number plates to be seized.

2. Instead, the following conditions on the Appellant’s CVOR certificate shall be for a period of three years effective on the date of this Order:

a. 13401774 Canada Inc. shall not allow a director or officer of DGMS to serve as a director or officer of the Appellant;

b. 13401774 Canada Inc. shall not allow Dillion Bovell to be a shareholder of the Appellant;

c. 13401774 Canada Inc. shall not allow Dillion Bovell to serve as a director, officer, manager or be employed by or contracted to the Appellant;

d. 13401774 Canada Inc. shall not permit as a driver or as an employee of or contractor to the Appellant, any driver who has been employed by or contracted to DGMS in the five years prior to the date of this Order.

Licence Appeal Tribunal

Jeffery Campbell, Vice-Chair