Temple & Temple Tours Inc. v. Registrar, Travel Industry Act, 2025 CanLII 10778

Licence Appeal Tribunal File Number: 16671/TIA

An appeal regarding extension of an immediate temporary suspension pursuant to s. 12 of the Travel Industry Act, 2002, S.O. 2002, c. 30, Sched. D (the "Act.").

Between:

Temple & Temple Tours Inc.

Appellant

-and-

Registrar, Travel Industry Act

Respondent

AMENDED DECISION AND ORDER

ADJUDICATOR: Jeffery Campbell, Vice-Chair

APPEARANCES:

For the Appellant: John Temple, Co-President David Temple, Co-President

For the Respondent: Dorian Werda, Registrar Husein Panju, Counsel Shantam Gorawara, Counsel

Heard by Videoconference: February 10, 2025

Background

1On January 23, 2025, the Registrar, Travel Industry Act (the “Registrar”) issued an Immediate Temporary Suspension Order (“ITSO”) and a Notice of Proposal to Revoke the Appellant’s Registration (“NOP”) of Temple & Temple Tours Inc. (the “Appellant”). The Registrar has temporarily suspended the registration of the Appellant as a matter of public interest.

2The Appellant appealed on January 27, 2025.

3The hearing commenced on February 10, 2025 to consider whether to extend the time of the expiration of the immediate temporary suspension order until the conclusion of the hearing in relation to the appeal of the NOP.

4The Notice of Proposal to Revoke Registration are on the following grounds:

i. Temple & Temple's financial position disentitles it to registration pursuant to section 8(1)(d)(ii)) of the Act.

ii. As David Temple is a corporate director of Temple & Temple, his past conduct also disentitles Temple and Temple to registration, pursuant to section 8(1)(d)(iv) of the Act.

iii. Temple & Temple's conduct in contravention of the Act and/or the regulations also disentitles it to registration pursuant to section 8(1)(e)) of the Act.

iv. Temple & Temple's breach of the 2015 Licence Appeal Tribunal Consent Order disentitles it to registration pursuant to section 8(1)(f) of the Act.

5It is the Registrar’s position that it is in the public interest to extend the ITSO and to revoke the Appellant’s registration.

ISSUE

6The issue to be decided is whether it is in the public interest that the Appellant’s licence remain suspended until the hearing related to the NOP to revoke the Appellant’s registration is concluded.

RESULT

7For the reasons that follow, the Immediate Temporary Suspension Order dated January 23, 2025 is extended until the hearing of the NOP is concluded.

LAW

8The Registrar has the legislative authority pursuant to s. 10 of the Act to issue a notice of proposal to revoke the registration of the appellant if, in the opinion of the Registrar, the Appellant is not entitled to registration.

9The Registrar has the legislative authority under s. 12 of the Act to temporarily suspend the registration of the Appellant if, in the Registrar considers it in the public interest to do so.

10Where the Appellant has appealed a notice of proposal, the Licence Appeal Tribunal (“LAT”) may extend the related immediate temporary suspension order until the hearing of the appeal of the notice of proposal has concluded, if a hearing begins within 15 days after receiving the appeal.

ANALYSIS

11With respect to the issue of whether the ITSO should be extended, the onus is on the Registrar to establish the following:

A. a prima facie case that the conduct that they are relying upon in the NOP has occurred and that, at first glance, the evidence if established is sufficient to substantiate the NOP, and

B. based on the evidence presented, that the conduct and circumstances are such that it is a matter of public interest that the registration remain suspended.

A. Prima Facie Case

12The prima facie case by the Registrar showed a basis for the allegations outlined by the Registrar in the Notice of Proposal, namely a prima facie case that the conduct alleged occurred and that at first glance the evidence is sufficient to substantiate the NOP.

13The Registrar alleges a pattern of non-compliance with working capital requirements as defined by s. 24 in Ontario Regulation 26/05 (“Regulation”) which requires that the registrant maintain current assets greater than its current liabilities.

14The Registrar presented evidence showing working capital deficiencies in 2014 and 2015. Those deficiencies were ultimately corrected and resolved by the Appellant by way of a Consent Order.

15The Registrar submitted further evidence to show that, in 2022, the Appellant had a working capital deficiency of $700,505.00. From December 2022 to February 2024, the Registrar provided eight deadlines for the Appellant to correct its working capital deficiency. In April 2024, the Registrar required the Appellant to file a Review Engagement Report (“RER”). That RER, authored by Fuller Landaur LLP, was produced on December 20, 2024. It showed a 2023 working capital deficiency of $791,924.00 and for 2024 of $1,294,275.00.

16The Appellant submits that $1,091.917.00 of the 2024 working capital deficiency for 2024 consists of debts to the Canada Revenue Service (“CRA”) and the Royal Bank of Canada (“RBC”). The Appellant submits that the CRA, by letter dated January 6, 2025, has offered a payment plan of $10,000.00 per month with respect to a Source Deductions arrears of $831,352.99. Also submitted is a second letter from the CRA dated January 6, 2025 which offers a payment plan of $2,000.00 per month with respect to HST arrears in the amount of $49,799.68. The Appellant submits the CRA debts should not be included in the working capital deficiency calculation as the CRA debts are not required to be paid in full in the current year.

17The Registrar submits that both letters indicate that the CRA will contact the Appellant in May 2025 to see if the Appellant is able to pay both the Source Deduction and HST arrears in full “at that time” and, therefore, should be included in the working capital deficiency calculations.

18The Appellant also submits that the RBC debt should not be calculated in the working capital deficiency as that debt has been litigated and RBC has received a judgment against the Appellant. That payment of that judgement has yet to be scheduled.

19When reviewing the evidence with respect to the Appellant’s 2024 working capital deficiency, I conclude that it is reasonable for both the CRA and RBC debts to be included in that deficiency. Even if they are not, the 2024 working capital deficiency would be $202,358.00. The Appellant submits that this also can be reduced to where there would be a slight positive working capital balance. However, there is no evidence before me in this regard. The prima facie evidence is that the Appellant has a working capital deficiency.

20The Registrar also submits that the Appellant has failed to properly deposit monies received into its trust account, as required by s. 27 of the Regulation. The Registrar submitted financial statements which show that monies received from customers were routinely kept in either the Appellant’s PayPal Account or in a “vault” (safe) for more than 2 days contrary to s. 27(1)(3) of the Regulation, which requires deposit into the trust account within two banking days of receipt.

21The Appellant submits that they would hold on to monies received and deposit those monies into the trust fund as lump sums. The Appellant also submitted that they viewed their PayPal account as a trust account.

22The Registrar submits that the pattern of depositing monies late not only breaches the requirements of the Regulation, but also makes audits of the Appellant difficult and less reliable. The Registrar also submits that the Appellant should have known that their PayPal account is not a trust account.

23The evidence and the Registrar’s submissions in this regard are prima facie persuasive. The evidence before me is enough to persuade me that there is a case, at first glance, that the Appellant has breached the requirement of the Regulation with respect to its trust account and monies to be held in trust.

24Given the above, with respect to the pattern of working capital deficiencies as well as the pattern of failure to properly deposit trust funds, I find that, at first glance, the evidence before me is sufficient, if established, to substantiate the NOP.

B. It is a matter of public interest that the registration remain suspended.

25The Registrar submits that the pattern of working capital deficiencies and the serious financial concerns with respect to the Appellant’s financial position (in particular, the CRA and RBC debts) show that there is a serious risk to the public if the suspension of the Appellant’s registration is not extended. It submits that, as well as running a deficit, there is a no way of knowing if either CRA and/or RBC could ‘call in’ the debts, thereby leading to the possible insolvency of the Appellant.

26The Appellant submits that they are currently working on their financial position. They do not expect CRA to demand the full payment of their arrears this year but rather to keep them on a reasonable repayment plan. They are also anticipating that reasonable terms will be worked out with respect to the RBC judgment. The Appellant further submits, and the Registrar agrees, that in 36 years in business, they have never had a complaint with respect to their dealings with their customers.

27The Appellant is to be commended on both their reputation regarding their relationship with their clients as well as their purported efforts to rectify their financial challenges. Nevertheless, I conclude that, given their heavy indebtedness and struggles with maintaining a positive working capital, there is a risk to the public should they, at this time, be permitted to resume operations prior to the hearing of the matter of the NOP. I find that it is in the public interest that the immediate suspension order be extended to the completion of the hearing.

ORDER

28Pursuant to s. 12(3) of the Act, the expiration of the Immediate Temporary Suspension Order is extended until the hearing of the Notice of Proposal is concluded.