Licence Appeal Tribunal File Numbers: 16788, 16789, 16790 and 16791/MVDA

In the matter of an appeal from a Notice of Proposal to Revoke Registration under section 9 of the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch B (the “Act”), and an Immediate Temporary Suspension Order issued under section 10 of the Act.

Between:

Karl Somwaru and Ryan Shaw

Appellants

and

Registrar, Motor Vehicle Dealers Act, 2002

Respondent

DECISION and ORDER

ADJUDICATOR: Bruce Stanton

APPEARANCES:

For the Appellant: Justin Jakubiak, Counsel

For the Respondent: Zachary Kowalsky, Counsel

Heard by videoconference: March 17, 2025

OVERVIEW

1On February 14, 2025, the Registrar under the Act, (the “respondent” or “Registrar”) issued a Notice of Proposal to Revoke Registration (“NOP”) and an Immediate Temporary Suspension Order (“ITSO”) to 18888601 Ontario Inc. o/a KJ Auto Sales/Approved Autoloans and Leasing (“KJ Auto”), with respect to its registration as a motor vehicle dealer, and to Karl Somwaru and Ryan Shaw (the “appellants”) in respect to their registration as motor vehicle salespersons. The appellants are the sole officers and directors of KJ Auto.

2KJ Auto is not appealing. Therefore, pursuant to section 9(4) of the Act, the Registrar may carry out its proposal to revoke the motor vehicle dealer registration of KJ Auto.

3The appellants appealed to the Licence Appeal Tribunal (the “Tribunal”) on March 4, 2025. The following Tribunal files were created:

i. 16788/MVDA – Somwaru, ITSO

ii. 16789/MVDA – Somwaru, NOP

iii. 16790/MVDA – Shaw, ITSO

iv. 16791/MVDA – Shaw, NOP

4Today’s hearing was scheduled for Tribunal file 16788/MVDA (ITSO, Mr. Somwaru). Mr. Somwaru’s legal representative is also the counsel of record for Ryan Shaw.

5A hearing in Tribunal file 16790/MVDA (ITSO, Mr. Shaw) is scheduled for Wednesday, March 19, 2025.

6Case conferences are scheduled for matters 16789/MVDA and 16791/MVDA, on the NOPs issued to Somwaru and Shaw, on April 8 and 10, 2025, respectively.

PRELIMINARY ISSUES AND ORDERS

Combining the appeals

7The appellants submitted, on consent, that the files for each of them should be combined for the purposes of a hearing.

8Each matter is based on the identical allegations that KJ Auto was not being financially responsible in the conduct of its business, for example failing to pay for extended warranties, not discharging liens on trade-in vehicles, and not sufficiently repaying its floor credit facility. The appellants submit that, as they are the sole officers and directors of KJ Auto, their registrations as salespersons were implicated by the dealership’s alleged financial transgressions.

9The appellants submit that, even though each have a separate registration as a salesperson, they share identical interests in this hearing because:

i. the offending conduct is principally that of the dealership that they co-own, direct, and have responsibility for;

ii. the witnesses who may be called to testify for the appellants in a hearing would be the same for each; and

iii. The appellants’ documentary evidence will be applicable and relevant to each appellant.

10The appellants submit that combining the hearing will therefore prevent duplication and lead to a more timely and efficient resolution of the merits of the proceeding.

11The respondent submits that since the appellants are represented by the same counsel and the same allegations underlie the Registrar’s actions in all of the files, it makes sense to combine the appeals into one proceeding.

12I find that the appeals filed by appellants shall be combined into one proceeding.

13Section 9.1 of the Statutory Powers Procedure Act, RSO 1990, c S.22 (the “SPPA”) stipulates that where two or more proceedings before a tribunal involve the same or similar questions of fact, law or policy, the tribunal may combine the proceedings with the consent of the parties. Clause (1)(b) of section 9.1 provides that the two or more proceedings can be heard at the same, with the consent of the parties.

14Subsection 9.1(5) stipulates that if the parties to a second-named proceeding consent, a tribunal may treat evidence that is admitted in a proceeding as if it were also admitted in another proceeding that is heard at the same time under clause (1)(b).

15Section 9.1 of the SPPA gives the Tribunal authority to combine four appeals in one proceeding. Under the circumstances, I find it is appropriate to do so.

16I agree with the parties that combining the files will lead to a more timely and efficient resolution of the merits of the proceeding. I am persuaded to combine the files because the underlying alleged conduct is identical in all of the appeals, the two appellants are represented by the same counsel, and the parties’ consent to combining them.

17Further, and considering that each appellant is alleged to have been engaged in the identical offending conduct, it is preferable that they should be co-appellants to the same hearing. In this way, the hearing adjudicator’s determination will apply equally, consistently, and be based on the presentation of the same documentary and oral evidence.

Tribunal’s authority to order an extension of the ITSO

18The parties agree that it is in the public interest to extend the ITSO until the conclusion of a hearing on these matters, but the Tribunal cannot consider that question unless the hearing on the related NOPs has also commenced.

19I find that combining the files is necessary for the purposes of considering an extension of the ITSO.

20Under subsection 10(3)(a) of the Act, an ITSO expires 15 days after the Tribunal receives a written request for a hearing under section 9 of the Act unless the Tribunal extends the time of expiration until the hearing is concluded. Section 10(3)(b) stipulates that the Tribunal may extend the expiration time of an ITSO if a hearing on the associated NOP has commenced within the 15-day period, i.e. no later than March 19, 2025. Put another way, to prevent the ITSOs from expiring on March 19, 2025, a hearing on the appellants’ NOPs must commence before March 19, 2025. Only then would the Tribunal have the authority to order an extension of the ITSOs until the hearing is concluded.

21By combining the appeals at today’s hearing, the Tribunal will have effectively commenced the hearing on the appellants’ NOPs and it therefore has the authority to order an extension of the ITSOs pursuant to section 10(3)(b) of the Act.

22I find that combining the appeals will facilitate the Tribunal’s consideration of an extension of the ITSO on the appellants.

ORDER

23The Tribunal will combine files 16788/MVDA, 16789/MVDA, 16790/MVDA, and 16791/MVDA and consolidate them under file 16788/MVDA. Tribunal files 16789, 16790 and 16791 will thereafter be closed.

24The hearing in the matter of 16790/MVDA scheduled for March 19, 2025 shall be vacated.

25The case conference scheduled for April 10, 2025 in the matter of 16791/MVDA shall be vacated in favour of the case conference scheduled for April 8, 2025. The case conference will consider the consolidated file 16788/MVDA and provide for settlement discussions and the refining of the issues in dispute and if settlement is not reached, the discussion of procedural elements of a future hearing including format, duration, dates, exchange of documents (productions), witnesses, and timelines for the filing of evidence.

Extension of the ITSO

26As noted above, subsection 10(3)(b) of the Act sets out the Tribunal’s authority to order an extension of the ITSO until the hearing in these matters has concluded, provided that a hearing on the NOP has commenced within the 15-day period. Since the appeals are now combined, the hearing on the NOP (issued under section 9 of the Act) in relation to the appellants is deemed to have commenced.

27The respondent submits that the ITSO was issued to protect the public interest, noting that the financial transgressions of the appellants have resulted in the owners of vehicles, that were traded-in to KJ Auto, continuing to be responsible for unpaid liens. It submits that the potential harm to consumers continues if the ITSO expires and that risk will be mitigated if it is extended.

28Although the appellants believe the potential for continuing harm to consumers is minimal, they consent to the extension of the ITSO. They submit that as KJ Auto has not appealed, they have accepted the termination of its registration as a motor vehicle dealer. The appellants submit that their registration as salespersons is connected to KJ Auto. With its registration revoked they no longer have a dealer to work at, as motor vehicle salespersons.

29The respondent submits that if the ITSO is allowed to expire on March 19, 2025, any attempt by the appellants to work at a registered motor vehicle dealer would require an application to the Registrar. The Registrar would then have the ability to intervene if the appellants attempted to work at a different dealer.

30Although the parties seem to agree that the risk to consumer harm that would arise from the ITSO expiring is small, I find that the ITSO shall be extended until the end of the hearing in these matters because the appellants consent to the extension and although the risk may be small, there is a public interest in preventing any further harm to consumers.

ORDER

31The ITSO in relation to the appellants is extended pursuant to section 10(3) of the Act until the conclusion of the hearing.

Adjournment

32The parties seek an adjournment of the hearing so that settlement discussions may pursued, and documents exchanged ahead of the April 8, 2025 case conference.

33Rule 16.2 of the Licence Appeal Tribunal Rules, 2023 (“Rules”) stipulates that a request for an adjournment may be made orally before a Member at an adjudicative event, and the request will only be allowed in compelling circumstances where the party did not and could not have known of the circumstances giving rise to the adjournment request prior to the event.

34I allow the adjournment request because the circumstances are compelling. The request came only after the parties’ discussion of the preliminary matters of this hearing and after my determination that the four appeals should be combined.

35Rule 16.3 sets out the factors to consider in granting an adjournment request. I have considered the factors and grant the adjournment request because:

i. The file is less than two weeks old;

ii. The request is on consent; and

iii. The adjournment will facilitate the further exchange of documents, settlement discussions, and refining of the issues in dispute prior to the case conference scheduled for April 8, 2024.

ORDER

36The hearing is adjourned to the date(s) to be determined at the case conference in this matter scheduled for April 8, 2025.

Other Procedural Issues

37The Licence Appeal Tribunal Rules 2023 apply to this appeal, except where varied by an order of the Tribunal.

38If the parties reach an agreement on the issues in dispute prior to the scheduled case conference, they shall immediately advise the Tribunal. The appellants must then file a Notice of Withdrawal with the Tribunal and serve a copy of that Notice to the respondent. The Tribunal will thereafter cancel the case conference and close the file.

39I am not seized of this matter.

Released: March 24, 2025

__________________________

Bruce Stanton

Adjudicator