Court Information

Date: December 5, 2017

Appeal Reference No.: 0860 999-13-100056-00

Ontario Court of Justice

Between:

Appellant: Hussein Dabaja

— And —

Respondent: Her Majesty the Queen in the Right of Ontario (Ontario Motor Vehicle Industry Council)

Before: Justice G.A. Campbell

Date Heard: October 25, 2017

Released: December 5, 2017

Counsel:

• Frank Miller, for the Appellant
• Michael Burokas, for the Respondent

CAMPBELL J.

REASONS FOR JUDGMENT ON APPEAL

Nature of Appeal

[1] On May 16, 2016, the Appellant was found guilty of being an unregistered car dealer, contrary to s. 4(1)(a) of the Motor Vehicle Dealers Act, 2002 (MVDA). He was sentenced on November 23, 2016 to custody for 30 days. He appeals from that sentence.

[2] This is a Part III Appeal, pursuant to the provisions of the Provincial Offices Act. Section 122 provides that the Court shall consider the fitness of the sentence before making any order that may include a dismissal or a variation of the sentence. The MVDA provides for a minimum fine upon conviction of $2,500.00 and up to $50,000.00 or to imprisonment for a term of not more than two years less a day, or both.

[3] There is a high threshold that must be met before this Court can intervene to vary the sentence. It is settled law that I should refrain from interfering unless I am satisfied there was an error in principle in coming to the decision on sentence or in these circumstances, the sentence was clearly excessive. See R. v. Cotton Felts Ltd., [1982] O.J. No. 178 (C.A.), paragraph 13.

The Trial Court's Findings and Reasons for Sentence

[4] Following a trial, the trier of fact concluded that as a consequence of the Appellant purchasing, owning and advertising vehicles, he was a dealer within the meaning of the MVDA and not registered to trade in motor vehicles as required by the act. In particular, he found the Appellant, as a sole proprietor, purchased vehicles from other dealerships, and at the relevant period of time possessed nine vehicles, owned four of them and advertised at least one for sale over the internet.

[5] Before passing sentence, the Justice of the Peace described the offence as a serious one arising from consumer protection legislation and emphasized what he described as aggravating factors; namely, the Appellant's past convictions, an unpaid fine and an outstanding restitution order. He dismissed as inappropriate the imposition of a fine and sentenced the Appellant to 30 days custody on the basis that a past intermittent sentence of incarceration and order for restitution had done nothing to change the Appellant's behaviour regarding fraudulent conduct.

The Appellant's Record and Submissions on Sentencing

[6] The prosecutor gave written notice of his intention to seek an increased penalty for what he described as the Appellant's previous convictions for the same or similar offences. Filed with the Court during sentencing were records of conviction and sentence as follows:

1. October 2005 – The Appellant was convicted at Windsor of operating a spray paint booth without a certificate of approval, contrary to Ontario's Environmental Protection Act. The Appellant was sentenced to pay a fine of $500.00. The fine had not been paid and remained outstanding.

2. May 2007 – The Appellant was convicted of defrauding a car dealership at Owen Sound of $11,130.00. The passing of sentence was suspended with the offender placed on probation for 18 months after making full restitution.

3. May 2007 – The Appellant was convicted of defrauding a car dealership at London of $44,940.00. The Appellant made restitution in the amount of $24,940.00 before being sentenced to 90 days intermittent custody, followed by a three year period of probation that included a condition that restitution in the sum of $20,000.00 be paid forthwith. The restitution remained outstanding at the time of sentencing.

[7] From the foregoing, fines and restitution totalled $56,570.00. A total of $36,020 had been paid by the Appellant leaving a net outstanding fine of $500 and restitution of $20,000.00 unpaid at the time of sentence.

[8] In furtherance of the prosecutor's submission for custody, he relied on a twenty-two page document printed from the Ontario Motor Vehicle Industry Council (OMVIC) website dealing with Enforcement Compliance – Charges and Convictions. OMVIC is charged by the Ontario government, through the Ministry of Government and Consumer Services, to enforce the provisions of the MVDA. The twenty-two page document is essentially a line item schedule of close to 300 separate entries identifying individuals who had been prosecuted by OMVIC between January, 2010 and April, 2016. Each line item is broken down under eight column headings by name, statute, charged section, number of counts, date of disposition, and city. During his submissions, the prosecutor discussed three of the convictions listed in the document and mentioned one other, all in support of his submission for a custodial sentence. From my review of the document, there would appear to be no more than 6 or 7 custodial dispositions recorded among what I calculate to be a total of 294 entries. The rest were dealt with by suspended sentence or fine. Notwithstanding the complete absence of any particulars in the document with respect to the circumstances, issues, findings or reasons for sentence, the prosecutor provided the Court with his recollection about those cases he chose to discuss where custody was ordered until such time as the following exchange with the court took place:

The Court: So, by the examples you used Mr. Bonham, and I – I'm guess I'm just going to interject as time goes on…

Mr. Bonham: Yes. I appreciate that.

The Court: … I hope no-one minds. It seems as though you're suggesting that there may be a range of between 30 days and …

Mr. Bonham: And – and that Mehran case was – was over a year and…

The Court: So, that's – that's a wide range. 30 days to 365 days.

Mr. Bonham: A very wide range.

The Court: That's a very wide range.

Mr. Bonham: Yes.

The Court: Okay.

[9] What is clear from the reasons for sentence is that the prosecutor's submission for custody was essentially based on the record of convictions, three entries from the OMVIC website supplemented by him as to facts and circumstances and the fact that a $20,000.00 restitution order and $500.00 fine remained unpaid.

[10] Counsel for the Appellant submitted for a fine for several reasons including it was a first offence and added that while an increased penalty was warranted because of similar convictions, there was a five year gap since the last conviction. Mr. Hughes, after first referencing section 718.2 of the Criminal Code, directing that all reasonable sanctions other than imprisonment ought to be considered, also referenced the OMVIC Enforcement Compliance document in his effort to guide the court toward disposition by way of a fine and like Mr. Bonham, supplemented the line entry with facts that were not in the material or available to the court.

OMVIC Records of Enforcement, Compliance, Charges and Convictions

[11] The OMVIC website containing details about enforcement, compliance, charges and convictions no doubt serves a useful purpose in maintaining a fair and informed marketplace for the trade of motor vehicles. To this end, the entries showing results of the Industry Council's enforcement efforts can serve to educate the public and give notice to its registrants that it is discharging its mandate. However, I hold the opinion that these superficial entries serve no useful purpose in the court room with respect to sentencing. Beyond informing the court about the Council's enforcement activities and results, the entries are more likely to obfuscate other important considerations with respect to sentencing. The limited data should not serve as a substitute for the dearth of reported decisions dealing with what the industry commonly refer to as curb-siders. Courts are governed by principles of sentencing. While these principles may include giving consideration to reported decisions relevant to parity of sentences, this principle should not give way to administrative expediency. Council should have appreciated the difficulty associated with relying on this document as being in any way helpful when they had to resort to supplementing the entries with history from their own knowledge or otherwise in an effort to provide the court with some form of context.

Proper Sentencing Principles

[12] The MVDA provides for penalties by way of fine ranging from $2,500.00 up to $50,000.00 and/or imprisonment for a term of not more than two years less a day, or both upon conviction for acting as a motor vehicle dealer while not being registered. The Act is silent in regard to what, if any, considerations the Court must entertain in respect of sentencing.

[13] Some limited guidance as to sentencing is found within the Provincial Offences Act. The POA provides a summary conviction procedure for the prosecution of Provincial Offences. Section 2 of the act indicates this procedure is adopted to reflect the distinction between provincial offences and criminal offences. Notwithstanding this general purpose, the statute does not negate the Criminal Code as a source of information for the purpose of interpretation.

[14] Part IV of the Act includes provisions with respect to sentencing where a defendant is convicted of an offence in a proceeding commenced by information. Although Part IV includes provisions and considerations with respect to the availability of pre-sentence reports, making submissions on sentencing, use of previous convictions, pre-sentence custody, costs, relief from minimum fines, probation and warrants of committal, the Act is devoid of any framework for setting out the purpose, principles or policy objectives associated with the sentencing process. Other than the general statement under the interpretive provisions of the Act referenced earlier and recognizing the distinction between provincial and criminal offences, the only guidance found with respect to sentencing an offender following conviction is found within s. 72 dealing with probation orders. The language is essentially consistent with the considerations outlined for determining the suitability of making a probation order under the Criminal Code of Canada indicating that the Court may "…having regard to the age, character and background of the defendant, the nature of the offence and the circumstances surrounding its commission…" impose a period of probation upon suspending the passing of sentence, imposing a fine or imprisonment.

[15] Accordingly, neither the MVDA nor the POA provide any guidance by way of approach to sentencing individuals who commit either the subject offence or any other regulatory offence. It has therefore been necessary for this void in sentencing principles and guidelines to be filled by the courts.

[16] I've received facta and case law from counsel, much of which focussed on sentencing principles derived from the Criminal Code of Canada, which of course since 1996 has included a statement of sentencing purposes and principles to assist the sentencing judge. Some of the authorities provided include decisions where courts have adopted the principles of sentencing found in the Criminal Code when dealing with regulatory offences. While I can point to nothing specifically that would exclude this step, it appears to me that embracing the Code as an acceptable alternative to sentencing within the regulatory framework should be avoided in the absence of the particular offence having within it an element of moral blameworthiness or fault.

[17] The Supreme Court of Canada decision in R. v. Sault Ste-Marie, [1978] 2 S.C.R. 1299, identified three categories of regulatory offences that consisted of, mens rea offences, strict liability offences and absolute liability offences. The vast majority of regulatory offences are strict liability although they may contain provisions that invoke a degree of moral culpability that would bring the offence closer to what the court called a "true crime" for which the present day Criminal Code purpose and principles of sentencing would have greater application. Examples of this can be found within the MVDA. Sections 26, 27 and 28 for example deal with falsifying information and false advertising which include mens rea elements.

[18] While some of the authorities counsel provided dealt with regulatory offences, including the often cited decision of R. v. Cotton Felts Ltd., [1982] O.J. No. 178 (C.A.) and Clark J.'s decision in R. v. Di Franco, [2008] O.J. No. 879 (S.C.), the only authority provided to me with respect to sentencing an offender found guilty of curb-siding is the Ontario Court of Justice decision in R. v. Campbell, [2014] O.J. No. 6671. All of these cases were appeals from sentence. Both Cotton Felts Ltd. and Di Franco were appeals from sentence involving convictions under the Occupational Health and Safety Act where fines were imposed.

[19] In Cotton Felts, the offender Appellant argued that the fine imposed was excessive. In Di Franco, the Crown appealed on the basis that the fine was inadequate and sought a custodial term. In Campbell, the Appellant argued that 32 days custody based on two days consecutive for each count was excessive.

[20] Cotton Felts is an impressionable decision from the Court of Appeal with respect to regulatory offences, having been released only four years after R. v. Sault Ste-Marie and was the first appeal to that level of court against a sentence under the Occupational Health and Safety Act. It was necessary for the court to consider the proper principles governing the imposition of fines for what the court called a large family of statutes creating public welfare offences. The Court of Appeal observed that enforcement was attained principally by imposing fines in an effort to achieve regulatory standards by deterrence.

[21] The Court was careful to point out that while general deterrence was the paramount factor to be considered in arriving at an appropriate sentence for public welfare offences, the general deterrence purpose was not to be taken in the usual negative connotation of achieving compliance by threat of punishment, but rather to be used as a driving force to encourage compliance by emphasizing community disapproval of an act and branding the behaviour as unacceptable so as to educate the public.

Fitness of the Sentence

[22] It is clear from a review of his submissions on sentencing that the prosecutor was seeking a custodial sentence to send a message to the Appellant with little regard for the objective of general deterrence. But for a casual remark about general and specific deterrence, the motivation for seeking a custodial sentence was because of the non-payment of a fine and restitution order together with the Appellant's past record of convictions. The Justice of the Peace likewise gave a nod to deterrence as being one of the goals of sentencing and an indication that he was required to consider aggravating and mitigating factors and proportionality before the sentenced was passed as follows:

The court had considered the imposition of another fine as an appropriate sentence and rejects that…for the reason that an intermittent period of incarceration and a restitution order has not changed the accused's behaviour regarding fraudulent conduct.

The court finds then, in all the circumstances, that a fair and just sentence is incarceration for a period of 30 days and the court so orders.

[23] Mr. Hughes then moved for a remand out of custody and inquired if the sentence could be served intermittently. The Justice of the Peace responded as follows:

I made the point during my decision of highlighting the intermittent jail sentence that was imposed for the 2007 fraud conviction, I believe, out of London Ontario, and that apparently hasn't in any manner influenced his behaviour vis-a-vis fraudulent conduct. So, what's – what's – my thinking is what is the sense in imposing another intermittent jail term with respect to this individual? It makes little sense to me. Something more than that is required and hopefully something more than that being imposed will without a doubt influence his behaviour going forward. That's my thinking.

[24] The sentence imposed was clearly focussed on punishment and specifically deterring the Appellant but not with this or necessarily other regulatory public welfare offences in mind. The reasons reveal that the justice of the peace was troubled by the fact Mr. Dabaja had re-offended generally and his reason for ordering incarceration included consideration about his past moral blameworthy behaviour.

[25] There were two errors in principle. The first arose as a consequence of sentencing with the objective of deterring the offender rather than imposing a sanction that would serve as a general deterrence, principally designed to change the behaviour of others, commonly known as curb-siders, who tend to have a detrimental effect on the public welfare purpose of the MVDA. The second error arose by equating past moral blameworthy behavior; namely, fraudulent conduct, with being an unregistered motor vehicle dealer.

[26] As a result, the sentence of 30 days jail was unfit as it was clearly excessive. This was not a serious offence. The offender's activities did not bring him within the realm of a large undertaking or enterprise. There was no victim or evidence to indicate that any of the vehicles had been sold to an uninformed consumer.

[27] One of the concerns raised by the prosecutor had to do with the risk to a consumer who purchases a vehicle from an unregistered dealer. In such an event, the consumer would not be able claim against a compensation fund. The Industry counsel's concern for protection of the public is not achieved entirely by enforcement procedures. This is also achieved by maintaining an informed market place. Moreover, the government's program and Industry compensation fund, while no doubt lauded by many, is not the only resource or recourse for consumers. The Council should not see itself as the consumer's only saviour. Other remedies are available at common law through contract and in tort. So, while the consequence of not being registered and thereby preventing a consumer from being able to access a compensation fund may be of genuine concern, the uninformed consumer is not entirely disadvantaged.

Order Varying Sentence

[28] The sentencing objective here is one of general deterrence within a regulatory framework. That objective can be met by way of a meaningful fine that is intended to change the behaviour of others in the industry, including the offender. The size of the fine must be more than just the cost of doing business. In addition to the size of the fine, there are other noteworthy considerations with respect to deterrence that can arise from enforcement.

[29] The MVDA includes provisions for dealing with offenders who fail to pay fines. Those consequences include the ability to not only disclose the offender's identity to consumer reporting agencies, which could affect an individual's credit rating but also the authority to create and register liens against personal and real property of an offender for non-payment of a fine.

[30] While remedial and rehabilitative measures such as well-crafted probation orders and community service can in some instances achieve regulatory objectives; for example, best practices in regard to managing the environment and addressing workplace safety, having regard to this particular industry of which the Appellant is not a member, and his personal history that includes two convictions for fraud, it is highly unlikely the Appellant will ever be accepted as a licensed registrant able to trade in automobiles. Accordingly, efforts to ensure his compliance and promote his own professionalism within the industry is not a consideration.

[31] A fit sentence therefore will be a meaningful fine substantial enough to inform other curb-siders as well as Mr. Dabaja that similar conduct will have consequences and any belief that the risk of a fine is just the cost of doing business will be realized as short-sighted.

[32] The sentence is hereby varied from a custodial term to a fine fixed in the sum of $7,500.00 plus administrative costs prescribed by regulation.

Released orally: December 5, 2017

Greg A. Campbell, Justice