Licence Appeal Tribunal File Number: 18026/MVDA

In the matter of an appeal from a Notice of Proposal to refuse a Registration issued by the Registrar pursuant to the Motor Vehicle Dealers Act, 2002, S.O. c. 30, Sch. B.

Between:

Khalid Chaudry

Appellant

and

Registrar, Motor Vehicle Dealers Act, 2002

Respondent

DECISION

VICE-CHAIR:

Kevin Kovalchuk

APPEARANCES:

For the Appellant:

Khalid Chaudry, Self-represented

For the Respondent:

Rutimi Tank, Counsel

HEARD: By Videoconference: March 31, 2026

OVERVIEW

1Khalid Chaudry o/a Fine Auto Sales (“the appellant”) appeals from a Notice of Proposal (“NOP”) to Revoke Registration dated November 9, 2025, by the Registrar (the “respondent”) under the Motor Vehicle Dealers Act, 2002, S.O. c. 30, Sch. B (the “Act”).

2The appellant admits that he is a sole proprietor.

3The NOP is based on the grounds that the appellant as salesperson, who is the sole proprietor of a motor vehicle dealership cannot reasonably be expected to be financially responsible in the conduct of his business. The NOP is further based on the grounds that the appellant breached a condition of registration and is therefore disentitled to registration.

4Prior to the hearing the respondent served and filed, a Notice of Further and Other Particulars (“NFOP”) dated March 30, 2026, alleging that on January 20, 2026, the appellant’s registration expired, and further alleging on March 19, 2026, the appellant applied for registration under the Act. The NFOP relies on the grounds in support of revocation set out in the NOP to refuse registration.

ISSUES

5The issues in dispute are:

i. Having regard to the financial position of the appellant, he cannot reasonably be expected to be financially responsible in the conduct of his business such that the appellant is disentitled to registration pursuant to s. 6(1)(a)(i) of the Act.

ii. Has the appellant breached a condition of his registration and therefore is disentitled to registration pursuant to s. 6(1)(f) of the Act.

iii. Whether the Tribunal should direct the respondent to carry out the proposal, substitute its opinion for that of the respondent or attach conditions to its order.

RESULT

6The refusal of registration for the appellant as motor vehicle dealer is confirmed.

THE law

7Section 6(1) of the Act provides that, subject to circumstances set out in s. 6(1)(a) an applicant is entitled to registration. Section 8(1) of the Act allows the registrar to refuse to register an applicant if, in his or her opinion, the applicant is not entitled to registration under section 6.

8Section 6(1)(a)(i) of the Act provides that one of the grounds the registrar may rely upon to refuse registration is if “the applicant is not a corporation and having regard to the applicant’s financial position the applicant cannot reasonably be expected to be financially responsible in the conduct of business”.

9Section 6(1)(f) of the Act provides that one of the grounds the registrar may rely upon to refuse registration is if “the applicant is in breach of a condition of the registration”.

10The Registrar’s NOP may be confirmed, modified, or set aside by the Tribunal under s. 9(5) of the Act. The Tribunal may also attach conditions to its order or to a registration.

Evidence AND Analysis

Respondent’s Evidence

11The respondent submits that there are two reasons to refuse to renew the appellants registration as a motor vehicle dealer namely:

1. On August 20, 2024, the appellant made a consumer proposal under the Bankruptcy and Insolvency Act, R.S.C.,1985, c.B-3 (the “Consumer Proposal”)

2. The appellant breached a condition imposed by a Consent Order issued by the Licence Appeal Tribunal on April 27, 2012, (the “Order”).

12The respondent relies on the testimony of Shelly Webb, OMVIC registration Services Manager.

13Ms. Webb testified that she became involved with the appellant after he applied online to OMVIC for a renewal of his business registration in January 2025. One of Ms. Webb’s team members brought the renewal to her attention because the appellant had stated in his renewal application that he had filed a Consumer Proposal in August of 2024.

14Ms. Webb explained that a Consumer Proposal is a financial arrangement made through a Trustee to try to pay back at least a portion of outstanding debts to creditors.

15Ms. Webb reviewed the online application during the hearing and testified that the applicant indicated on the application that he filed a consumer proposal because his business was affected by COVID and illness and that he was making monthly payments trying to pay off his indebtedness “ASAP.”

16As a result of communications with the appellant, Ms. Webb learned that the appellant had indeed made a Consumer Proposal, with respect to monies owing to creditors in the total amount of $130,943.00. As part of that communication, Ms. Webb also received a report of Rumanek & Company Ltd. Licenced Insolvency Trustee dated, August 21, 2024, which she reviewed. Ms. Webb highlighted a portion of the report indicating that the Trustee was of the opinion that the cause or causes of the appellant’s insolvency were financial mismanagement and business losses due to COVID-19.

17Of particular concern to Webb was that three of the creditors were the CRA of which, two were for outstanding HST accounts and that at least two other creditors were cheque cashing establishments.

18Ms. Webb presented a letter dated April 4, 2025, from Rumanek & Company Ltd. indicating that the Consumer Proposal calls for a total payment of $27,000 payable at a rate of $450 per month for 60 months and was scheduled for completion in October 2029. An additional report from the Trustee dated August 21, 2024, indicated that the Consumer Proposal provides for a payout of fourteen cents on the dollar after the Administrator’s fees and disbursements.

19Continuing her testimony Ms. Webb indicated that when assessing the appellant’s application, she has to first consider consumer protection and second the potential exposure to the Motor Vehicle Dealers Compensation Fund, if the appellant cannot meet his financial obligations.

20She testified that because the appellant is protected under a Consumer Proposal a consumer cannot seek financial compensation from the appellant in the same way that a consumer could seek financial compensation from a motor vehicle dealer who is not subject to a Consumer Proposal. She further testified that if a consumer had an issue with a vehicle, they purchased from the appellant, which could not be resolved without recourse to the courts, any court order for payment to the consumer would be held in abeyance until the Consumer Proposal had been completed in 2029. She testified that rather than wait until 2029, the consumer could seek payment from the Motor Vehicle Dealers Compensation Fund for payment of the court order.

21Ms. Webb testified that the appellant had agreed to the conditions in the Order, which she reviewed during the hearing. She pointed to condition number 29 of the Order which states, the appellant will comply with all federal, provincial and municipal tax obligations and ensure all required filings are current and submitted with required payments. Ms. Webb reiterated that the Consumer Proposal had three outstanding debts to CRA two of which were for outstanding HST accounts. In Ms. Webb’s opinion these outstanding debts showed that the appellant did not meet condition number 29 of the Order.

22Finally, Ms. Webb was asked her opinion on whether any terms and conditions could be imposed on the applicant’s registration. Ms. Webb was of the opinion that the applicant’s present financial situation did not provide any guarantee that he would be able to resolve consumer complaints. She noted that the imposition of terms and conditions may assist in regulating conduct, but they can be breached which may thwart the consumer protection goals of the Act.

23In addition, Ms. Webb testified that in her opinion, because the appellant’s business is a sole proprietorship this elevates the risk to consumers because the dealer and the individual are one in the same. In essence the appellant’s financial situation is the same as the dealer’s situation.

Appellant’s Evidence

24The appellant testified that he was ill at the time he entered into the Consumer Proposal. He testified that he is still making payments on time. A letter dated April 4, 2025, from the Trustee confirmed that as of that date, the payments on the Consumer Proposal were current and in good standing.

25On cross examination, the appellant agreed to the following:

i. The Consumer Proposal indicates that “his business is not in good financial shape”

ii. The Consumer Proposal shows debt of $130,000,00.

iii. He did not provide any information about his health issues to OMVIC.

iv. Some of the debts identified in the Consumer Proposal were debts owed to CRA with respect to HST.

v. One of the reasons for the Consumer Proposal was financial mismanagement.

vi. He is a sole proprietorship.

vii. Given his financial position there is a risk to consumers who make legal claims against him.

viii. He is aware that before his registration expired it was subject to certain conditions one of which was that he pay all debts when due.

ix. The fact that he filed a Consumer Proposal suggests that he did not pay his debts when due.

x. His payment plan continues to October 2029.

26During cross examination, the appellant explained that he sells cars “as is” that are not safety certified which in his opinion, lessens the risk of consumer complaints. He then admitted that, selling cars “as is” could still result in consumer complaints.

ANALYSIS

Appellant cannot reasonably be expected to be financially responsible in the conduct of his business

27I find the respondent has met its burden pursuant to s. 6(1)(a)(i) of the Act. and demonstrated that the appellant cannot be reasonably expected to be financially responsible in the conduct of its business.

28The respondent has the burden of proving, on a balance of probabilities that the appellant cannot reasonably be expected to be financially responsible in the conduct of business.

29The respondent submits that the evidence supports a refusal of registration under s.6 (1)(a)(i) of the Act. The respondent points to the Consumer Proposal as evidence that the appellant has not shown a consistent and positive financial situation. The respondent further submits that the Consumer Proposal is a formal court approved indicator of insolvency.

30The respondent highlights the fact that, the appellant owes money to the CRA particularly with respect to HST remittances, as well as that, the appellant owes money to alternative lenders. The respondent submits that taken together these two debts reflect financial instability and a limited capacity to absorb consumer related liabilities.

31The appellant submitted that he has been a motor vehicle dealer for the past eighteen years without any complaints.

32I find that the testimony of Ms. Webb regarding the Consumer Proposal made by the appellant is confirmed by the documentary evidence. I accept the testimony of Ms. Webb that the Act is concerned with consumer protection and also strives to prevent claims being made to the Motor Vehicle Dealers Compensation Fund.

33I accept the testimony of the appellant, elicited through cross-examination that one of the reasons he filed the Consumer Proposal was due to financial mismanagement, that he did not pay his debts when due, that “his business is not in good financial shape” and that given his financial position there is a risk to consumers who make legal claims against him.

34I accept that the appellant owes money to the CRA particularly with respect to HST remittances.

35I place little weight on the appellant’s testimony that because he only sells cars “as is” that are not mechanically certified, that lessens the risk to consumers. In cross examination he admitted that consumer complaints could still arise out of these types of vehicle sales. I agree that consumer complaints could still arise out of these types of sales.

36The following evidence convinces me that the appellant cannot reasonably be expected to be financially responsible in the conduct of his business:

i. He made a Consumer Proposal showing debt of $130,000.00 for a total payment of $27,000 payable at a rate of $450 per month for 60 months that was scheduled for completion in October 2029.

ii. Some of the debts in the Consumer Proposal were to the CRA particularly with respect to HST remittances indicating a breach of one of the conditions he agreed to in the Order, that he would comply with all federal, provincial and municipal tax obligations and ensure all required filings are current and submitted with required payments.

iii. He admitted that “his business is not in good financial shape”.

iv. He admitted that given his financial position there is a risk to consumers who may make legal claims against him.

v. He admitted that he had to file the Consumer Proposal because he did not pay his debts on time.

vi. He admitted that one of the reasons for his filing the Consumer Proposal was due to financial mismanagement.

vii. He was aware that before his registration expired it was subject to certain conditions one of which was that he pay all debts when due.

37One of the objectives of the Act is consumer protection. I find that current state of the appellant’s finances convinces me that he cannot reasonably be expected to be financially responsible in the conduct of his business thus putting potential consumers at risk if they have a claim against the appellant, or his business which I find to be one and the same.

Appellant has breached a condition of his registration

38I find that the respondent has met its burden pursuant to s. 6(1)(f) of the Act and demonstrated that the appellant breached a term of his registration.

39As noted earlier in these reasons, at the time of this hearing, the appellant’s registration had expired. However, during the period of his prior registration, he breached one of the terms of that registration, which was that he will comply with all federal, provincial and municipal tax obligations and ensure all required filings are current and submitted with required payments.

40The appellant admitted in cross-examination that he breached this condition of registration as evidenced by the Consumer Proposal he filed.

41The respondent submits that this is another indication that the appellant is not financially responsible.

42I find that the appellant did breach a condition of registration in failing to ensure all required tax filings are current and submitted. I also find this breach to be further evidence that he cannot reasonably be expected to be financially responsible in the conduct of his business.

Registrar’s decision to refuse registration is confirmed, conditions denied

43I confirm the Registrar’s decision to refuse the registration of the appellant.

44The Registrar’s NOP may be confirmed, modified or set aside by the tribunal under s. 9(5) of the Act. The Tribunal may also attach conditions to its order or to a registration.

45The respondent submits that the appellant’s objective financial position gives rise to a real and ongoing risk that he will not be financially responsible going forward, resulting in a risk to consumers.

46The respondent asks the Tribunal to confirm the decision of the registrar and opposes the use of conditions for the appellant’s registration because additional conditions cannot address the respondent’s concerns. The respondent submits that the appellant was previously subject to conditions that were breached and that the evidence shows that the appellant did not submit HST remittances despite condition number 29 of the Order. The respondent goes on to submit that this breach shows that conditions were not effective in preventing the appellant’s further financial deterioration.

47The appellant made no submissions with respect to the imposition of conditions on his registration.

48As I have found that the appellant cannot reasonably be expected to be financially responsible in the conduct of his business and that he breached a previous condition of registration, I must now determine if the decision to refuse registration should be modified.

49I find that the appellant’s breach of a condition with respect to his previous registration causes me to be concerned that if he is registered, his precarious financial position gives rise to the real and ongoing risk that he will not be financially responsible. I also find that his previous breach of a condition causes me to be concerned that he may not comply with any conditions imposed.

50The evidence and testimony related to the appellant’s financial position and breach of a previous condition convinces me not to modify the Registrars decision to refuse registration. I find that the registrar has valid reasons to believe that the appellant will not be financially responsible in the conduct of his business. I also find that the registrar has valid reasons to believe that the appellant may not abide by any conditions that may be imposed on his registration.

51I am not satisfied that the impositions of conditions will result in the appellant becoming financially responsible. I also find that allowing registration for the appellant will put consumers at risk. I therefore decline to modify the NOP.

52Having regard to all the evidence, I direct the Registrar to carry out the NOP and decline to modify the NOP.

ORDER

53Pursuant to s. 9(5) of the Act, I order the respondent to carry out the NOP to refuse registration to the applicant.