Ontario (Ministry of Public and Business Service Delivery) v. Shazam Construction and Contracting Inc., 2024 ONCJ 297

CITATION: Ontario (Ministry of Public and Business Service Delivery) v. Shazam Construction and Contracting Inc., 2024 ONCJ 297

IN THE MATTER OF

the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A.

and

Ontario Regulation 17/05

Between

Ministry of Government and Consumer Services

(now known as Ministry of Public and Business Service Delivery)

prosecutor

and

Shazam Construction and Contracting Inc.,

Mariyam Khan,

and

Azam Khan

defendants

Ontario Court of Justice

Brampton, Ontario

Quon J.P.

Reasons for Judgment

Trial held: April 27, 2023, April 28, 2023, June 20, 2023, September 12, 2023, November 17, 2023, January 24, 2024, and February 13, 2024.

Judgment released: June 17, 2024.

Counsel:

J. Chiang, counsel for the Ministry of Public and Business Service Delivery

For the defendants (Azam Khan, Mariyam Khan, and Shazam Construction and Contracting Inc.) they were being self-represented by Azam Khan.

Charges:

For the corporate defendant Shazam Construction and Contracting Inc.:

Counts #1, #2, and #3 on Information #22-5478 in respect to Shazam Construction and Contracting Inc. were withdrawn by the Crown on April 27, 2023

(count #8) Shazam Construction & Contracting Inc. on or about the 3^rd day of December 2019 at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of fail to deliver to Muhammad Memon, a consumer, a direct agreement containing the information required by section 35(1) of the Ontario Regulation 17/05, of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to s. 42(1) of the said Act, and thereby committing an offence contrary to subsection 116(2) of the said Act;

(count #9) Shazam Construction & Contracting Inc. between the 3^rd day of December 2019 and the 29^th day of May 2020 at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of engage in an unfair practice by making a false, misleading or deceptive representation to Muhammad Memon, a consumer, contrary to section 17(1) Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, and thereby committed an offence contrary to subsection 116(1)(b)(ii) of the said Act;

(count #10) Shazam Construction & Contracting Inc. on or about the 15^th day of June 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of fail to refund Muhammad Memon, a consumer, within 15 days after the date the said consumer gave notice of cancellation of a consumer agreement, in accordance with the requirements prescribed by section 79(1) of Ontario Regulation 17/05 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to Section 96(1)(a) of the said Act, and thereby committed an offence contrary subsection 116(1)(b)(viii) of the said Act;

For the defendant Mariyam Khan:

Counts #4, #5, and #6 on Information #22-5478 in respect to Mariyam Khan, as an Officer or Director of Shazam Construction and Contracting Inc., were withdrawn by the Crown on April 27, 2023

(count #11) Mariyam Khan being an Officer or Director of Shazam Construction & Contracting Inc., on or about the 3^rd day of December 2019, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did fail to prevent Shazam Construction & Contracting Inc. from committing the offence of fail to deliver to Muhammad Memon, a consumer, a direct agreement containing the information required by section 35(1) of Ontario Regulation 17/05 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to section 42(1) of the said Act, and thereby committed an offence contrary to subsection 116(3) of the said Act;

(count #12) Mariyam Khan being an Officer or Director of Shazam Construction & Contracting Inc., between the 3^rd day of December 2019 and the 29^th day of May 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did fail to prevent Shazam Construction & Contracting Inc. from committing the offence of engage in an unfair practice by making a false, misleading or deceptive representation to Muhammad Memon, a consumer, contrary to section 17(1) of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, and thereby committed an offence contrary to subsection 116(3) of the said Act;

(count #13) Mariyam Khan being an Officer or Director of Shazam Construction & Contracting Inc., on or about the 15^th day of June 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did fail to prevent Shazam Construction & Contracting Inc. from committing the offence of fail to refund to Muhammad Memon, a consumer, within 15 days after the date the said consumer gave notice of cancellation of a consumer agreement, in accordance with the requirements prescribed by s. 79(1) of Ontario Regulation 17/05 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to Section 96(1)(a) of the said Act, and thereby committed an offence contrary to subsection 116(3) of the said Act;

For the defendant Azam Khan:

Count #7 on Information #22-5478 in respect to Azam Khan, being a person representing Shazam Construction and Contracting Inc., was withdrawn by the Crown on April 27, 2023

(count #14) Azam Khan being a person representing Shazam Construction & Contracting Inc., between the 3^rd day of December 2019 and the 29^th day of May 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of engage in an unfair practice by making a false, misleading or deceptive representation to Muhammad Memon, a consumer, contrary to section 17(1) of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, and thereby committed an offence contrary to subsection 116(1)(b)(ii) of the said Act.

Cases Considered or Referred To:

Ontario (Ministry of Consumer Services) v. K-Tech Building Systems Inc., [2012] O.J. No. 1764 (O.C.J.), per Quon J.P.

Ontario (Ministry of Labour) v. Enbridge Gas Distribution Inc., 2010 ONSC 2013 (Ont. S.C.J.), per

Ramdath v. George Brown College of Applied Arts and Technology, [2013] O.J. No. 3151 (O.C.A.), per MacPherson, Cronk and Rouleau JJ.A., affirming [2012] O.J. No. 5389 (S.C.J.O.), per Belobaba J.

Ramdath v. George Brown College of Applied Arts and Technology, [2012] O.J. No. 5389 (S.C.J.O.), per Belobaba J.

R. v. Elm Tree Nursing Home Inc., [1987] O.J. No. 491 (QL) (Ont. C.A.), per Goodman, Cory and Finlayson JJ.A.

R. v. Sault Ste. Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299, 40 C.C.C. (2d) 353 (S.C.C.).

Statutes and Regulations Cited:

Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A., ss. 1, 2(1), 2(2), (2(3), 4, 5, 5(1), 7(1), 14, 14(1), 14(2), 14(2)(8), 14(2)(9), 15, 16, 17(1), 17(2), 18(1), 18(3), 20(1), 42(1), 43, 43(1), 43(2), 92, 92(4), 92(3), 92(5), 94, 94(2), 95, 96(1)(a), 116(1), 116(1)(b)(ii), 116(1)(b)(viii), 116(2), and 116(3).

General Regulation (Consumer Protection Act, 2002), O. Reg. 17/05, ss. 35, 35(1), 35(1)(2), 35(1)(3), 35(1)(5), 35(1)(11), 35(1)(13), 35(2), 79(1), and 83(2)(b).

Exhibits Entered:

Exhibit "1" - copy of agreement between Shazam Construction & Contracting Inc. and Muhammad Memon to install 3 Windows and a Side Entrance for $12000 and to do renovation of basement at 22 Francis Lundy Street, Brampton which includes, “To Purchase and Bring Initial Material Framing; Plumbing & Ducting, Electric Job, Roughing & Inspection; Insulation Installs; Drywall Installation; Compounding and Sanding; Tiling for Washroom; Paint; Laminate; Electric Finishing & Baseboard/Doors Installation; Sprinkle & Shut Off Valve Installation; Kitchen upon Finishing; Material” for $30,200 (Labor & Material). (3 pages)

Exhibit "2" - copy of Muhammad Memon’s credit card statement indicating:

DEC 14 DEC 16 THE HOME DEPOT #7006 BRAMPTON ON $1,551.21

JAN 02 JAN 03 AAR PLUMBING AND HEATI BRAMPTON ON $ 628.74

(one page).

Exhibit "3" - copy of text messages between Azam Khan and Muhammad Memon from December 2, 2019 to July 5, 2020 (13 pages).

Exhibit "4" - copy of letter dated March 24, 2020 from Sunil Monga, consultant Homeopath, on AASHIRWAAD HOMEOPSTHY letterhead, which states “acute homeopathic case with chief complaints of high-grade fever, cough, and body aches discussed over a phone consultation. Homeopathic remedy recommended. Patient advised to undertake COVID-19 investigation”. (1 page)

Exhibit "5" - copy of the Corporate Profile Report produced February 28, 2022, at 11:06, for Shazam Construction & Contracting Inc., indicating an Ontario corporation number of 2244755, a registered office address 8 Elkhurst Road, Brampton, Ontario, Canada L6A 4A6, and indicating an incorporation date of May 21, 2010, and also indicating the corporation’s status as active and the jurisdiction is Canada-Ontario, and also indicating that Mariyam Jehan Khan is the director of the corporation. (8 pages)

1. INTRODUCTION

[1] When a home owner hires a contractor to do a basement renovation there has to be an element of trust between them. The homeowner has to trust that the contractor will complete the work and that the work will be properly done; while the contractor has to trust that the homeowner will fully pay the contractor for the renovation work when it is complete.

[2] In the present case, Muhammad Memon, a homeowner, had been referred by his sister to the defendant, Azam Khan, to provide a quote for constructing a basement apartment in the house that Memon had purchased. Memon’s sister had recommended Azam Khan to Memon because Azam Khan or his company, Shazam Construction & Contracting Inc. had completed two basement renovations for Memon’s sister for the two houses that she had owned. Memon had wanted to have a basement apartment constructed in his house in order to rent out the basement apartment to help with his mortgage payments. Azam Khan met Memon at Memon’s house located at 22 Francis Lundy Street in Brampton to discuss the basement project and on December 3, 2019, Azam Khan had prepared and presented a quote to Memon to build a side entrance for the basement apartment, install three windows in the basement, and to demolish and do rough framing for the basement apartment, and to do electrical, plumbing and drywalling and other work for the basement apartment for a total cost of $42,200. The quote had been on the letterhead of Shazam Construction and Contracting Inc. (“Shazam Construction”). Memon then accepted the quote and Shazam Construction then proceeded with the project to construct the basement apartment and to also install a side entrance and 3 basement windows.

[3] Azam Khan’s wife, Mariyam Khan, is the director of Shazam Construction while Azam Khan was acting as a representative of Shazam Construction and is the person who did the actual construction work for Shazam Construction and the person who had hired the subcontractors to do work on Muhammad Memon’s basement apartment and who interacted and communicated with Muhammad Memon on behalf of Shazam Construction.

[4] Furthermore, in order to save money on the basement renovation to his house, Memon had informed Azam Khan, the representative for Shazam Construction, that he did not want to pay any of the required taxes for constructing the basement apartment and Azam Khan had agreed to do the basement renovation without charging Memon for any taxes. However, Azam Khan did not prepare a formal written agreement with Memon for the construction of the basement apartment and both parties instead relied on the document containing the quote (Exhibit #1) as the agreement for the basement renovation. Memon had also used that document to record moneys paid to Shazam Construction and to a subcontractor of Shazam Construction who installed the side entrance and had Azam Khan and the subcontractor sign on the document for moneys received from Memon. Furthermore, to save additional money on the basement project, Memon told Azam Khan that Memon would accompany Khan to Home Depot and the plumbing supply store and that Memon would pay for the materials for the basement apartment directly to avoid Azam Khan and Shazam Construction marking-up the price for the materials.

[5] The work on the basement renovation commenced sometime at the end of December of 2019. However, Azam Khan who had begun the construction work on the basement project had stopped attending Muhammad Memon’s house to do any more work on the basement apartment and had also stopped communicating with Memon sometime around May 26^th, 2020. Moreover, Azam Khan and Shazam Construction had in essence abandoned the construction project which led Memon to file a complaint with the Ministry of Government and Consumer Services (now known as the Ministry of Public and Business Service Delivery) and to hire another contractor at added cost to redo and finish the basement project started by Shazam Construction. After the Ministry investigated Memon’s complaint, the Ministry charged the three defendants, Shazam Construction & Contracting Inc. and its director, Mariyam Khan, and its representative, Azam Khan with committing 3 categories of offences under the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A, namely: (1) failing to deliver to a consumer a direct agreement containing the prescribed information, (2) engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer, and (3) failing to provide a refund to a consumer within 15 days after the date the said consumer gave notice of cancellation.

[6] For the first category of offences, the agreement that had been provided to the consumer, Mohammed Memon, did not comply with the regulations under the Consumer Protection Act, 2002.

[7] For the second category of offences, Azam Khan, who had been acting on behalf of Shazam Construction, had made false representations to Mohammed Memon in respect to their agreement to construct a basement apartment in Mohammed Memon's house.

[8] And for the third category of offences, when Mohammed Memon had exercised his rights under the Consumer Protection Act, 2002 to cancel the agreement with Shazam Construction, Shazam Construction did not honor these cancellations and did not provide a refund to Mohammed Memon as required.

[9] Moreover, at about the same time that Azam Khan and Shazam Construction had stopped working on the basement apartment for Memon in April of 2020, the COVID-19 pandemic had begun and the pandemic would cause delays in inspectors attending construction projects, and eventually government stay-at-home orders were issued which also affected the construction industry. During the pandemic, government ordered shutdowns of non-essential businesses made it difficult for contractors to complete their construction projects on time. The effects of the pandemic and Azam Khan contacting COVID-19 is one of the defences that has been raised by the defendants for not being able to complete the basement renovation project at Mohammed Memon's house.

[10] For this regulatory prosecution, the consumer Muhammed Memon had filed a complaint against the defendants with the Ministry after the defendants had stopped communicating with Memon and abandoned the basement project and had failed to complete the basement renovation of Memon’s house. These events and transactions between the consumer, Muhammed Memon, and the defendants had occurred during a period covering about 5 and 1/2 months between December 3, 2019 and June 15, 2020.

[11] Originally 14 charges under the Consumer Protection Act, 2002 were laid respectively against the three defendants and are set out in 14 counts that are contained in one information numbered as #22-5478. The information containing the 14 charges had been received by the court on April 26, 2022. The proceeding therefore commenced on April 26, 2022. On the first day of the trial on April 27, 2023, counts #1 to #7 were withdrawn by the prosecution. The prosecution also brought a pre-trial motion to amend counts #9, #12 and #14 in order to amend the original offence dates for those 3 counts from the period between December 3, 2019 and May 9, 2020 to the period between December 3, 2019 and May 29, 2020. After the evidence portion of the trial was completed the application to amend those 3 counts was granted by the court.

[12] The trial of these 7 charges lasted seven days during which 3 witnesses testified: one for the prosecution and two for the defence.

2. THE CHARGES

[13] Of the remaining charges in the information that had not been withdrawn by the prosecution, the defendants, Shazam Construction and Contracting Inc., Mariyam Khan, and Azam Khan have been individually and respectively charged with committing 7 offences under the Consumer Protection Act, 2002 or under its regulations that are set out in 7 separate counts.

(a) Categories Of Charges

[14] The 7 charges that were laid respectively against the defendants can be divided into three general categories. They may referred to as:

(1) the “improper agreement” offences;

(2) the “unfair practices” offences; and

(3) the “fail to provide a refund” offences.

[15] But more particularly, Shazam Construction and Contracting Inc. has been charged with committing these three categories of offences in respect to the consumer, Muhammad Memon, and are set out in counts #8, #9, ad #10.

[16] In addition, the defendant Mariyam Khan was charged in her role or capacity as an officer or director of Shazam Construction for failing to prevent the corporate defendant, Shazam Construction and Contracting Inc., from committing the three specific categories of offence in relation to the consumer, Muhammad Memon, and are set out in counts #11, #12, and #13.

[17] Additionally, the defendant Azam Khan, as a representative of Shazam Construction, has been charged for committing the offence of engaging in an unfair practice towards the consumer, Muhammad Memon, and is set out in count #14.

3. BACKGROUND

[18] The prosecution contends that Shazam Construction had entered into an agreement with Muhammad Memon on or about December 3, 2019, to construct a basement apartment and to install a side entrance and 3 basement windows in the house owned by Muhammad Memon located at 22 Francis Lundy Street in Brampton, but then after commencing the work on the basement project Shazam Construction abandoned the project sometime around May 26^th, 2020 and left Memon with an unfinished basement and the need for Memon to hire other contractors with an added cost to redo and finish the basement of Memon's house. Memon then complained to the Ministry of Government and Consumer Services about the defendants and the unfinished work for the basement apartment. The Ministry then investigated the complaint and subsequently charged the defendants with offences related to not providing a proper agreement to the homeowner, engaging in an unfair practice towards the homeowner, and for failing to provide a refund to the homeowner after the homeowner had requested a refund.

[19] In their defence, the defendants contend that Azam Khan, a representative of Shazam Construction and who had been the person who did the construction work, had contracted Covid-19 and had been too ill to work for several months from late March to May of 2020; that the government had imposed a "stay-at-home" order so that contractors were not allowed to go into other people's houses in early 2020; and that municipal building inspectors would also not attend residential houses to do inspections, so that the defendants could not complete the work for Memon’s basement apartment that had been agreed to.

(a) The Ministry of Government and Consumer Services charges the defendants with committing offences under the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html), on April 26, 2022

[20] After the Ministry of Government and Consumer Services investigated Muhammad Memon’s complaints about Shazam Construction and Azam Khan, the Ministry charged Shazam Construction, its director, Mariyam Khan, and the representative of Shazam Construction, Azam Khan, with violating provisions of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A. A Part III information containing the 7 charges against the defendants was sworn and the proceeding commenced on April 26, 2022. Summonses were also issued for the 3 defendants to appear in the Brampton Provincial Offences Court on June 7, 2022.

(b) The corporate defendant

[21] The Corporation Profile Report dated February 28, 2022, and entered as Exhibit #5, indicates that the corporate defendant, Shazam Construction & Contracting Inc., is an Ontario-incorporated company and was incorporated on May 21, 2010, with an Ontario Corporation Number of 2244755. The Report also states that the corporate defendant’s registered office address is located at 8 Elkhurst Road, Brampton, Ontario, Canada L6A 4A6. Moreover, the Report also indicates that the status of Shazam Construction & Contracting Inc. is that it is still an active entity and that the governing jurisdiction for the corporate defendant is “Canada-Ontario”.

(c) Mariyam Khan is the director listed for Shazam Construction & Contracting Inc.

[22] Mariyam Khan is the director of the corporate defendant, Shazam Construction & Contracting Inc., since its date of incorporation on May 21, 2010, as indicated by the Ontario Corporation Profile Report contained in Exhibit #5.

(d) Azam Khan is a representative of Shazam Construction & Contracting Inc.

[23] From Muhammad Memon’s testimony and from the text messages in Exhibit #3, Memon only had contact or communication with Azam Khan. Azam Khan met with Memon at Memon’s house and also did work on the construction of the basement apartment. In addition, Azam Khan had prepared the quote and agreement for constructing the basement apartment on Shazam Construction letterhead and presented it to Memon on December 3, 2020. Memon also accompanied Azam Khan when Khan went to the Home Depot store in Brampton and the plumbing store to purchase materials for constructing the basement apartment. Furthermore, Azam Khan had arranged for the subcontractors, Sweeta Singh, who installed the side entrance for Memon’s basement apartment and for Adeel Muhammad, the electrician, to do work on Memon’s basement apartment. Therefore, Azam Khan, at all material times was acting as a representative of Shazam Construction in Shazam Construction’s dealings with the consumer Muhammad Memon in the construction of the basement apartment at 22 Francis Lundy Street in Brampton.

(e) The Consumer Agreement between Shazam Construction & Contracting Inc. and Muhammad Memon (Exhibit #1)

[24] On page 1 of Exhibit #1 there is a Shazam Construction & Contracting Inc. logo in the upper left-hand corner, with Azam Khan’s name and telephone number of (416) 786-0018 and Ontario Corp # 002244755 and addressed to Muhammad Memon and c/o Khalida Memon of 22 Francis Lundy Street in Brampton.

[25] Page 1 of this document also indicates that the priority Sequence of work is for “3 Windows Install With Side Entrance” that would cost a total of $12,000 and consists of $3000 in material, $1500 for a bin and $7500 for labour. Also on p. 1 of the document there is handwriting which indicates under the heading “Payment Given” of $4,000 on 24/2/20; $3,000 on 9/3; $2,600 on 14/3 which totalled 9600 and under the heading, “Sweeta Singh”, $9600 on 14/3 and 2400 which totals to an amount of $12,000 on 17/3, and which also indicates that it was received and signed by Sweeta Singh. Also in writing there is a writing which states “received this payment amount of $12,000”.

[26] On page 2 of the document, there is a Shazam Construction and Contracting Inc. logo in the upper left-hand corner, with Azam Khan’s name and telephone number of (416) 786-0018 and Ontario Corp # 002244755 and addressed to Muhammad Memon and c/o Khalida Memon of 22 Francis Lundy Street in Brampton. Page 2 also indicates the priority Sequence of work is for the following:

• To Purchase and Bring Initial Material $300.

• Framing. $2000.

• Plumbing and Ducting. $2000.

• Electric Job, Roughing & Inspection $3,000.

• Insulation installs. $700.

• Drywall Installation. $2000.

• Compounding and Sanding. $2000.

• Tiling for Washroom. $1500.

• Paint. $1000.

• Laminate. $1500.

• Electric Finishing & Baseboard/Doors Installation. $2000.

• Sprinkle & Shut Off Valve Installation. $700.

• Kitchen upon Finishing. $1500.

• Material. $10,000.

Total with Labor & Material $30,200.

[handwriting: +800

31,000

• 12,000

43,000 ]

Note: $800 is to be received at the time of signing the Contract.

On page 3 (back of p.2) under heading “AZAM”:

[handwriting: Resevid – DEC – 3 – 2019 “signature of Azam Khan”, 500.00

Home Dept. 1500/ 1,551.21

24/12/19 600.00

27/12 " 5,000—

Plumbing " 628.74

“signature of Azam Khan”, 4/1/20 800 –

9/1/20 2200—

Received 11,279--

“B What’s’”

(f) Azam Khan contends that Mohammed Menon wanted to cut Shazam Construction out of the transaction by hiring and paying Sweeta Singh directly to construct the side entrance instead of paying Shazam Construction to construct the side entrance

[27] Azam Khan also contends that Mohammed Memon had cut Shazam Construction out of the transaction when Memon had paid $12,000 on March 17, 2020, directly to Sweeta Singh to construct the side entrance instead of paying the $12,000 to Shazam Construction as required by the agreement between Memon and Shazam Construction. At trial, when Azam Khan had asked Memon if Khan had told Memon to pay the $12,000 to Sweet Singh, Memon had replied, “Sir, you are the one who sent these people, so that's why I paid these people.”

[28] On the other hand, the entire basement project consisted of side entrance windows, the side entrance and the basement renovation, and only after all these elements were completed would the project be completed. Moreover, the prosecution submits that p. 5 of the text messages (Exhibit #3) between Mohammed Memona and Azam Khan demonstrates that Memon did not try to cut Shazam Construction out of the transaction, since Memon had reached out to Azam Khan and queried Khan on March 17th, 2020, about Sweeta Singh and had specifically asked for Azam Khan's involvement:

“I paid to him or sent to your side. Please reply ASAP.” “I'm not giving him remains payment.” “If you are not doing send me cancellations.” “When are they coming to take out the basement door.”

[29] Furthermore, the prosecution contends that these text messages from Memon to Azam Khan are from a consumer taking his complaints about a subcontractor to the general contractor. Moreover, the prosecution contends that Menon did not cut Shazam Construction out of the agreement and that Azam Khan’s suggestion that Shazam Construction was cut out of the agreement is potentially a convenient explanation made by someone who is trying to evade responsibility as a general contractor. In addition, the prosecution submits that Azam Khan’s contention ought to fail because there is a lack of evidence to establish that Menon was trying to cut anyone out and it is also irrelevant for the purposes of this prosecution because Shazam Construction, as the supplier, still had responsibilities to Mohammed Memon under the Consumer Protection Act, 2002.

[30] Although the prosecution argues that Memon’s response to Azam Khan’s question would not be indicative of someone who is trying to cut Azam Khan or Shazam Construction out of the job, Azam Khan’s contention that Memon had cut Shazam out of the transaction and had only contacted Azam Khan when Sweeta Singh had wanted more money from Memon to install the three basement windows is plausible and not illogical. Shazam Construction was the general contractor in the construction of the basement apartment and Azam Khan had subcontracted the side entrance work to Sweeta Singh. On March 17, 2020, Memon had paid $12,000 to Sweeta Singh and Sweeta Singh had signed on March 17, 2020 that he had received $12,000 from Memon for the side entrance work. Azam Khan’s plausible contention that Shazam had been cut out of the transaction can be reasonably inferred from the evidence about how Memon had insisted on attending the Home Depot with Azam Khan to purchase building materials and the plumbing supply store to purchase plumbing materials for the basement construction and that Memon had paid for those materials himself instead of relying on Azam Khan to purchase the materials. Considering that Memon’s insistence on attending with Khan to purchase materials and then paying for the materials himself to avoid paying Shazam Construction’s mark-up of the cost of the building and plumbing materials would not be consistent with a homeowner who would be so readily agreeable to pay the subcontractor Sweeta Singh the $12,000 without first calling or contacting Azam Khan or Shazam Construction about whether Menon should or should not pay Sweeta Singh the $12,000 for the side entrance work, especially when the agreement to construct the basement apartment, build the side entrance, and to install the three basement windows had been with Shazam Construction and not with Sweeta Singh. Moreover, it is consistent on the other hand with a homeowner like Memon who appears to be trying to save money at every turn, such as paying for the building and plumbing materials himself to avoid having to pay any mark-up by Shazam Construction, so it would not be unreasonable to believe that Memon could have approached Sweeta Singh and paid Sweeta Singh directly to build the side entrance in order to avoid paying a perceived marked-up cost to Shazam Construction as the general contractor for the side entrance work. However, there is no evidence adduced that shows Memon had cut out Shazam Construction from the transaction, since Sweeta Singh, the person who constructed the side entrance did not appear at trial to testify.

4. ANALYSIS

(A) HAS THE PROSECUTION PROVEN BEYOND A REASONABLE DOUBT THAT THE DEFENDANTS HAVE RESPECTIVELY COMMITTED THE ACTUS REUS OF THE OFFENCES SET OUT IN COUNTS #8 TO #14?

[31] Ontario homeowners, who hire and pay money upfront to contractors to do home renovations or repairs to their homes, are protected under [Ontario’s ]Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A, when the contractor fails to complete that work and when contractors also fail to refund the money paid upfront to the homeowner. The Consumer Protection Act, 2002 also requires the contractor to provide the homeowner with a properly worded written agreement detailing the costs and a description of the work to be done and if the contractor fails to provide a properly worded written agreement as proscribed by the legislation to the homeowner, the homeowner may cancel the agreement with the contractor at any time within one year of the date the agreement is entered into between the homeowner and the contractor and the contractor is then required to refund money for work not yet completed back to the homeowner. Additionally, officers and directors of corporations, who are home renovation or construction contractors, are personally liable and may also be charged for allowing or permitting the corporate contractor to contravene provisions of the Consumer Protection Act, 2002.

[32] In the present prosecution by the Ministry of Government and Consumer Services (now known as the Ministry of Public and Business Service Delivery), the prosecution alleges that Shazam Construction and Contracting Inc., a construction company, and the director of the company, Mariyam Khan, and a representative of Shazam Construction, Azam Khan, have committed 7 offences respectively under the Consumer Protection Act, 2002 in relation to Muhammad Memon, a consumer. However, on the first day of trial on April 27, 2023, the prosecution withdrew 7 counts (counts 1 to 7 on Information #22-5478) and only proceeded on the remaining 8 counts (counts 8 to 14 on Information #22-5478). Counts #1 to #7 were in respect to different consumers.

[33] The 7 counts (counts #8 to #14) contain offences that are strict liability offences in which the prosecution is only legally required to prove that the defendants have committed the actus reus of each offence beyond a reasonable doubt and is not legally required to prove any mens rea element for the 7 offences. And, if the prosecution fulfills its legal and persuasive burden in proving that the defendants have committed the actus reus for each of the offences beyond a reasonable doubt, then the legal burden shifts to the defendants to prove the defence of due diligence on a balance of probabilities for each of the 7 offences in order for the defendants not to be convicted of those offences.

[34] Furthermore, because the charges in this regulatory prosecution are strict liability offences, it will have to be first determined whether the prosecution has proven beyond a reasonable doubt that the respective defendants have committed the actus reus of those offences set out in the “improper agreement” charges, the “engaging in an unfair practice” charges, and the “fail to provide a refund” charges, and the charges in respect to the defendant in her capacity as an officer or a director of the corporation for failing to prevent the corporation from committing those acts or omissions prohibited under the Consumer Protection Act, 2002. And, if the prosecution has met their burden in proving the actus reus of the offences beyond a reasonable doubt, then it will have to be determined if the defendants have made out the defence of due diligence on a balance of probabilities in order that they not to be convicted of their respective charges. Therefore, if the defendants are able to prove that they took all reasonable care in the circumstances to prevent or avoid committing the offences in their respective charges then they would be acquitted of those offences: R. v. Sault Ste. Marie, 1978 11 (SCC), [1978] 2 S.C.R. 1299, 40 C.C.C. (2d) 353 (S.C.C.).

(1) Mariyam Khan, As The Director Of Shazam Construction Would Be Guilty Of Committing The Offences Set Out In Counts #11, #12, And #13, If The Prosecution Proves Beyond A Reasonable Doubt That Shazam Construction Has Committed The Offences Set Out In Counts #8, #9, And #10, Unless Mariyam Khan Can Prove The Defence Of Due Diligence On A Balance Of Probabilities.

[35] Under s. 116(3) of the Consumer Protection Act, 2002, an officer or director of a corporation is guilty of an offence if he or she fails to take reasonable care to prevent the corporation from committing an offence mentioned in ss. 116(1) or (2):

Corporation

116(3) An officer or director of a corporation is guilty of an offence if he or she fails to take reasonable care to prevent the corporation from committing an offence mentioned in subsection (1) or (2).

[36] Mariyam Khan, as the director of Shazam Construction, has been charged with committing offences in respect to s. 116(3) of the Consumer Protection Act, 2002.

[37] Consequently, if it is determined that Shazam Construction has committed the three offences set out in counts #8, #9, and #10 beyond a reasonable doubt, then Mariyam Khan, as the director of Shazam Construction, would also be equally liable for the same three offences being committed by Shazam Construction according to s. 116(3), unless Mariyam Khan can prove on a balance of probabilities that she had taken all reasonable care to prevent Shazam Construction from committing those three specific offences set out in counts #11, #12, and #13.

(2) Does The Consumer Protection Act, 2002 Apply To The Transaction Between Shazam Construction And Muhammad Memon?

[38] Section 2(1) of the Consumer Protection Act, 2002 states that subject to the exemptions listed in ss. 2(2) and 2(3), the Consumer Protection Act, 2002 applies to all consumer transactions where either the consumer or the person that engages in the transaction with the consumer is located in Ontario when the transaction takes place [emphasis is mine below]:

Application

2(1) Subject to this section, this Act applies in respect of all consumer transactions if the consumer or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place.

[39] Both Muhammad Memon and Azam Khan, the representative of Shazam Construction, were located in Brampton in Ontario at the time the agreement for Shazam Construction to construct the basement apartment for Memon was agreed to on December 3, 2019.

(a) Is the transaction between Shazam Construction and Muhammad Memon a “consumer transaction” within the meaning of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)?

[40] A “consumer transaction” is defined in s. 1 of the Consumer Protection Act, 2002 and means any act or instance of conducting business or other dealings with a consumer, which also includes a consumer agreement:

“consumer transaction” means any act or instance of conducting business or other dealings with a consumer, including a consumer agreement; (“opération de consommation”)

[41] Moreover, a “consumer agreement” is also defined in s. 1 of the Consumer Protection Act, 2002 and means an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment [emphasis is mine below]:

“consumer agreement” means an agreement between a supplier and a consumer in which,

(a) the supplier agrees to supply goods or services for payment, or

(b) the supplier agrees to provide rewards points to the consumer, on the supplier’s own behalf or on behalf of another supplier, when the consumer purchases goods or services or otherwise acts in a manner specified in the agreement; (“convention de consommation”)

[42] Furthermore, a “consumer” is also defined in s. 1 and means an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes:

“consumer” means an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes; (“consommateur”)

[43] As well, a “supplier” is also defined in s. 1 and means a person who is in the business of selling, leasing, or trading in goods or services, or is otherwise in the business of supplying goods or services:

“supplier” means a person who is in the business of selling, leasing or trading in goods or services or is otherwise in the business of supplying goods or services, and includes an agent of the supplier and a person who holds themself out to be a supplier or an agent of the supplier; (“fournisseur”)

[44] Ergo, in order to be governed by the Consumer Protection Act, 2002, a supplier must be involved in selling or supplying “goods” or “services” to a consumer where one of them is located in Ontario when the transaction takes place.

(i) Shazam Construction is a “supplier” for the purposes of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)

[45] Based on the agreement (Exhibit #1) and the testimony of Muhammad Memon, the corporate defendant, Shazam Construction & Contracting Inc., is a “supplier” as defined under s. 1 of the Consumer Protection Act, 2002. The consumer agreement between Muhammad Memon and Shazam Construction was entered into at Memon’s house located at 22 Francis Lundy Street in the City of Brampton, which is in the Province of Ontario, had been for Shazam Construction to provide “services” by constructing a basement apartment, installing 3 windows, installing a side entrance for Memon’s house for $42,200.

[46] Accordingly, Shazam Construction is a “supplier” within the meaning of the Consumer Protection Act, 2002.

[47] Moreover, for the purposes of the Consumer Protection Act, 2002, constructing a basement apartment and installing windows and a side entrance for Muhammad Memon by Shazam Construction are “services” as defined under s. 1 of that Act:

“services” means anything other than goods, including any service, right, entitlement or benefit; (“services”)

(ii) Muhammad Memon is a “consumer” within the meaning of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)

[48] In respect to the 7 charges that the three defendants had been arraigned on, they all relate to one consumer named Muhammad Memon. Menon had testified that he had entered into an agreement with Azam Khan, a representative of Shazam Construction & Contracting Inc., on or about December 3, 2019, to construct a basement apartment, install 3 basement windows and install a side entrance for his house located at 22 Francis Lundy Street in Brampton for $42,200. Memon had received the agreement (Exhibit #1) from Azam Khan on December 3, 2019. The agreement was on Shazam Construction’s letterhead. From the handwriting on the agreement entered as Exhibit #1, it appears that Memon had paid $12,000 of the total cost of $42,200 to Sweeta Singh, a subcontractor for Shazam Construction, for constructing and installing the side entrance for the basement apartment. Additionally, the handwriting on the agreement also appears to indicate that Memon had paid approximately $18,700.05 of the total cost of $42,200 to Shazam Construction. Moreover of the $18,700.05 that Memon had paid, Memon had personally paid $2179.95 with his credit card for the building materials and plumbing materials for the basement apartment when Memon had accompanied Azam Khan to the Home Depot store and the plumbing supply store to buy materials, which is evidenced by Exhibit #2.

[49] Furthermore, there is no evidence that Muhammad Memon’s transaction with Shazam Construction had been for “business purposes”. On the other hand, the testimony from Muhammad Memon indicated that Memon’s agreement with Shazam Construction to construct a basement apartment in Memon’s house at 22 Francis Lundy Street in Brampton had been for “personal, family or household purposes”. Accordingly, Muhammad Memon is a “consumer”, as defined under s. 1 of the Consumer Protection Act, 2002.

[50] Ergo, for counts #8 to #14 in this proceeding, the consumer is Muhammad Memon.

(iii) Muhammad Memon had entered into a “consumer agreement” with Shazam Construction

[51] The transaction between Shazam Construction and the consumer, Muhammad Memon, was a “consumer agreement” as defined under s. 1 of the Consumer Protection Act, 2002:

“consumer agreement” means an agreement between a supplier and a consumer in which,

(a) the supplier agrees to supply goods or services for payment, or …

[52] Muhammad Memon had testified that he had entered into an agreement with Azam Khan, a representative of Shazam Construction, in which Shazam Construction had agreed to supply “services”, namely constructing a basement apartment and installing 3 basement windows and installing a side entrance in Memon’s residential house located at 22 Francis Lundy Street in Brampton, for payment by Memon of $42,200 (see Exhibit #1), that is within the meaning of the Consumer Protection Act, 2002. Moreover, Muhammad Memon had made payments respectively to Shazam Construction and to Sweeta Singh, a subcontractor of Shazam Construction, for constructing the basement apartment and for installing the side entrance and 3 basement windows at 22 Francis Lundy Street in Brampton. Ergo, the transaction between Shazam Construction and Muhammad Memon which is set out in the agreement document found in Exhibit #1 is a “consumer agreement” as defined under s. 1 of the Consumer Protection Act, 2002, since that document is an agreement between a supplier and a consumer in which Shazam Construction, the supplier, agrees to supply services for payment to Muhammad Memon.

(b) Is the transaction between Shazam Construction and Muhammad Memon exempted under [ss. 2(2)](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html) and [2(3)](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html) of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)?

[53] In addition, certain situations or transactions are specifically exempted from the purview of the Consumer Protection Act, 2002 and those situations are expressly stated in ss. 2(2) and 2(3). These exempted situations include such consumer transactions that are regulated under the “Securities Act”; that are professional services regulated under a statute of Ontario; that are consumer transactions for the purchase, sale, or lease of real property, unless they are related to time share agreements; that are consumer transactions regulated under the “Residential Tenancies Act, 2006”; or that are consumer transactions related to the supply of a public utility [emphasis is mine below]:

Exceptions

2(2) This Act does not apply in respect of,

(a) consumer transactions regulated under the Securities Act;

(b) financial services related to investment products or income securities;

(c) financial products or services regulated under the Insurance Act, the Credit Unions and Caisses Populaires Act, 1994, the Loan and Trust Corporations Act or the Mortgage Brokerages, Lenders and Administrators Act, 2006;

(d) consumer transactions regulated under the Commodity Futures Act;

(e) prescribed professional services that are regulated under a statute of Ontario;

(f) consumer transactions for the purchase, sale or lease of real property, except transactions with respect to time share agreements as defined in section 20; and

(g) consumer transactions regulated under the Residential Tenancies Act, 2006.

Same

2(3) This Act does not apply to the supply of a public utility or to any charge for the transmission, distribution or storage of gas as defined in the Ontario Energy Board Act, 1998 if such charge has been approved by the Ontario Energy Board.

[54] The evidence adduced at trial indicates that the transaction between Muhammad Memon and Shazam Construction does not fall within the exemptions outlined under ss. 2(2) or 2(3) of the Consumer Protection Act, 2002.

[55] Ergo, since both Shazam Construction and Muhammad Memon were located in Ontario when the transaction between them had occurred for the supply of services, then the Consumer Protection Act, 2002 applies to Muhammad Memon’s transaction with Shazam Construction.

(c) The consumer agreement between Shazam Construction and Muhammad Memon is a “direct agreement”

[56] A “direct agreement” is defined in s. 20(1) of the Consumer Protection Act, 2002, and means a consumer agreement that is negotiated or concluded in person at a place other than, at the supplier’s place of business, or at a market place, an auction, trade fair, agricultural fair or exhibition:

20(1) In this Part,

“direct agreement” means a consumer agreement that is negotiated or concluded in person at a place other than,

(a) at the supplier’s place of business, or

(b) at a market place, an auction, trade fair, agricultural fair or exhibition;

[57] The agreement between the consumer, Mohammed Memon and Shazam Construction is a “direct agreement” for the purposes of the Consumer Protection Act, 2002, since the consumer agreement entered into between Mohammed Memon and Shazam Construction to construct a basement apartment and to install a side entrance and 3 basement windows (Exhibit #1) was negotiated and concluded at Memon’s residence located at 22 Francis Lundy Street in Brampton and not at Shazam Construction’s place of business or at a market place, an auction, trade fair, agricultural fair or exhibition.

(B) THE “IMPROPER AGREEMENT” OFFENCES IN COUNTS #8 AND #11?

[58] For the improper agreement offences, count #8 relates to Shazam Construction for failing to deliver a proper direct agreement containing the prescribed information to the consumer Mohammed Memon on December 3, 2019, and count #11 relates to Mariyam Khan, as the director of Shazam Construction, for failing to prevent Shazam Construction from failing to deliver a proper direct agreement containing the prescribed information to the consumer Mohammed Memon on December 3, 2019:

Count #8:

Shazam Construction and Contracting Inc. on or about December 3, 2019, at the City of Brampton, did fail to deliver to Muhammad Memon, a consumer, a direct agreement containing the information required by s. 35(1) of the O. Reg. 17/05, contrary to s. 42(1) of the Consumer Protection Act, 2002, thereby committing an offence under s. 116(2) of Consumer Protection Act, 2002.

Count #11:

Miriam Khan being an Officer or Director of Shazam Construction and Contracting Inc., on or about December 3, 2019, at the City of Brampton, did fail to prevent Shazam Construction and Contracting Inc. from committing the offence of fail to deliver to Muhammad Memon, a consumer, a direct agreement containing the information required by s. 35(1) of the O. Reg. 17/05, contrary to s. 42(1) of the Consumer Protection Act, 2002, and thereby committed an offence under s. 116(3) of Consumer Protection Act, 2002.

[59] The prosecution contends that the “direct agreement” between Shazam Construction and Muhammad Memon did not contain the prescribed requirements that are set out in s. 35 of Ont. Reg. 17/05. Furthermore, s. 116(2) of the Consumer Protection Act, 2002 provides that a person who contravenes or who fails to comply with a provision of a regulation made under the Act is guilty of an offence:

116(2) A person who contravenes or fails to comply with a provision of a regulation made under this Act is guilty of an offence.

(1) As The [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html), Is Silent On Who Has The Duty Under S. 42(1) To Deliver A Direct Agreement To The Consumer Containing The Prescribed Requirements Contained S. 42(1), Is There An Implied Duty On The “Supplier” To Perform Such Duty?

[60] Furthermore, for “direct agreements”, s. 42(1) of the Consumer Protection Act, 2002 provides that every direct agreement shall be in writing and delivered to the consumer and be made in accordance with the prescribed requirements:

Requirements for direct agreements

42(1) Every direct agreement shall be in writing, shall be delivered to the consumer and shall be made in accordance with the prescribed requirements.

[61] However, s. 42(1) is silent on who has to deliver the direct agreement to the consumer with the prescribed requirements. But, since the Consumer Protection Act, 2002 is public welfare legislation, then this particular legislation must be interpreted broadly to achieve the purpose of that legislation, and as such, the only reasonable interpretation of who has the duty to perform the duty set out in s. 42(1) is the “supplier”.

[62] In R. v. Elm Tree Nursing Home Inc., [1987] O.J. No. 491 (QL) (Ont. C.A.), Goodman J.A., writing for the Court of Appeal for Ontario, held that if the legislation in question is silent on who has the duty to comply with a specific act or does not impose a duty on an accused person to act, then there would be no offence [emphasis is mine below]:

Where it was intended that a duty be placed on a licensee or administrator or other person that certain acts be done, various sections expressly so provide. In those instances it is clear that a failure of the person to fulfill the duty imposed by the regulation constitutes an offence under the Act. It is equally clear that any person who does an act which is prohibited by the provisions of the regulation will be guilty of an offence and it is not necessary that the prohibition be directed against a particular individual. In my opinion, however, where sections of Regulation 690 do not create a duty or where they create a duty but do not expressly impose such duty on any person there can be no offence created under those sections within the meaning of s. 19 of the Act.

[63] However, in Ontario (Ministry of Labour) v. Enbridge Gas Distribution Inc., 2010 ONSC 2013 (Ont. S.C.J.), at paras. 48 and 49, the same issue arose on who had the duty to act when the statute was silent on who had that duty to act. In resolving that issue, Bellamy J. reasoned that to properly interpret the legislation to determine who had that duty it should be based on the interpretation which best promotes public safety and the public welfare purpose of the legislation while respecting the procedural rights of the accused party [emphasis is mine below]:

The legislature must have intended something when it included the word "accurately" in s. 228(1). The only party that can ensure accuracy is the party conducting the locate, that is Enbridge or its agent PUL. It is inconceivable that the legislature intended to create a duty on an excavator who has no control or legal ability either to do the locate or to do it accurately. If the legislature intended to ensure that the locate was done accurately, there is only one party who could bear that responsibility: the owner, the party to whom the legislature directs the inquiry to be made.

This interpretation best promotes the public safety and welfare purpose of this public welfare legislation, while respecting the procedural rights of the accused company. The best way to ensure public safety when dealing with inherently dangerous commodities such as gas is to prohibit anyone but the owner, or its agent, from accurately locating and marking it. Public safety is not enhanced by narrowing the range of who can be responsible, by moving away from a "belt and braces" approach. Public safety is not enhanced by immunizing from liability the owners of a service if they are in error.

[64] Therefore, since the Consumer Protection Act, 2002 is a public welfare statute, then provisions in this particular legislation must be interpreted broadly to achieve the legislative purpose of protecting consumers in dealings with suppliers. Moreover, the Consumer Protection Act, 2002 applies to future performance agreements, which are consumer agreements between a supplier and a consumer where the supplier agrees to supply goods or services for payment. Hence, the only logical and reasonable interpretation of who would have the duty set out in s. 42(1) to deliver a “direct agreement” to the consumer containing the requirements prescribed in s. 35 of Ont. Reg. 17/05 would be the “supplier”. Furthermore, this interpretation that the “supplier” has that duty under s. 42(1) is supported by s. 35 of O. Reg. 17/05 that sets out the prescribed requirements that have to be contained in a direct agreement, which contains many references to the “supplier”, such as in s. 35(1)(2) which requires the “name of the supplier” to be contained in the direct agreement; in s. 35(1)(3) which requires the “telephone number of the supplier” to be contained in the direct agreement; and in s. 35(1)(13) which requires the “rights, if any, that the supplier agrees the consumer will have in addition to the rights under the Act and the obligations, if any, by which the supplier agrees to be bound in addition to the obligations under the Act, in relation to cancellations, returns, exchanges and refunds.”

[65] Furthermore, the Consumer Protection Act, 2002 by virtue of s. 1, defines “consumer agreements” for the purpose of this legislation to be between “suppliers” and consumers, and since only the “suppliers” are obligated to provide the goods or services to the consumer by that agreement, then it is not only logical, but the only reasonable interpretation that can be made that “suppliers” would have the duty to deliver a “direct agreement” to the consumer containing the prescribed requirements under s. 42(1).

[66] Moreover, both Shazam Construction, as well as directors and officers of Shazam Construction, are required to ensure that “direct agreements” comply with the regulations.

[67] In addition, under ss. 4 and 5 of the Consumer Protection Act, 2002, a consumer agreement that meets the criteria of more than one type of agreement to which the Consumer Protection Act, 2002 applies, shall comply with the provisions of this Act and of the regulations that apply to each type of agreement. And, if a supplier is required to disclose information to a consumer under this Act, the disclosure must be clear, comprehensible and prominent and if a supplier is required to deliver information to a consumer under this Act, the information must, in addition to satisfying the requirements in subsection 5(1), be delivered in a form in which it can be retained by the consumer [emphasis is mine below]:

Consumer agreements

4. A consumer agreement that meets the criteria of more than one type of agreement to which this Act applies shall comply with the provisions of this Act and of the regulations that apply to each type of agreement for which it meets the criteria, except where the application of the provisions is excluded by the regulations.

Disclosure of information

5(1) If a supplier is required to disclose information under this Act, the disclosure must be clear, comprehensible and prominent.

Delivery of information

(2) If a supplier is required to deliver information to a consumer under this Act, the information must, in addition to satisfying the requirements in subsection (1), be delivered in a form in which it can be retained by the consumer.

(2) Did Shazam Construction Fail To Deliver To The Consumer, Muhammad Memon, A Direct Agreement Containing The Information Required By S. 35 Of [O. Reg. 17/05](https://www.canlii.org/en/on/laws/regu/o-reg-17-05/latest/o-reg-17-05.html)?

(a) What information is required to be contained in a direct agreement?

[68] The prescribed requirements for “direct agreements” are contained in s. 35 of the “General” Regulation under the Consumer Protection Act, 2002, Ont. Reg. 17/05 [emphasis is mine below]:

Requirements for direct agreements

35(1) For the purpose of subsection 42(1) of the Act, a direct agreement that is not for a good or service prescribed by subsection 35.1(1) shall be signed by the consumer and the supplier and shall set out the following information:

1. The name and address of the consumer.

2. The name of the supplier and, if different, the name under which the supplier carries on business.

3. The telephone number of the supplier, the address of the premises from which the supplier conducts business, and information respecting other ways, if any, in which the supplier can be contacted by the consumer, such as the fax number and e-mail address of the supplier.

4. The names of,

i. the person, if any, who solicited the consumer in connection with the agreement,

ii. the person, if any, who negotiated the agreement with the consumer, and

iii. the person who concluded the agreement with the consumer.

5. The date on which and the place where the agreement is entered into.

6. A fair and accurate description of the goods and services to be supplied to the consumer, including the technical requirements, if any, related to the use of the goods or services.

7. The total amount payable by the consumer under the agreement or, if the goods and services are to be supplied during an indefinite period, the amount and frequency of periodic payments.

8. The terms of payment.

9. An itemized list of the prices at which the goods and services are to be supplied to the consumer, including taxes and shipping charges.

10. If the agreement includes a trade-in arrangement, a description of the trade-in arrangement and the amount of the trade-in allowance.

11. A statement containing the text set out in subsection (2) and, if applicable, the additional text set out in subsection (3),

i. which shall be in at least 10 point type, except for the heading which shall be in at least 12 point bold type, and

ii. which shall appear on the first page of the agreement, unless there is a notice on the first page of the agreement in at least 12 point bold type indicating where in the agreement the statement appears.

12. As applicable, the date or dates on which delivery, commencement of performance, ongoing performance and completion of performance are to occur.

13. The rights, if any, that the supplier agrees the consumer will have in addition to the rights under the Act and the obligations, if any, by which the supplier agrees to be bound in addition to the obligations under the Act, in relation to cancellations, returns, exchanges and refunds.

14. The currency in which amounts are expressed, if it is not Canadian currency.

15. Any other restrictions, limitations and conditions that are imposed by the supplier.

(2) The statement mentioned in paragraph 11 of subsection (1) shall set out the following:

Your Rights under the Consumer Protection Act, 2002

You may cancel this agreement at any time during the period that ends ten (10) days after the day you receive a written copy of the agreement. You do not need to give the supplier a reason for cancelling during this 10-day period.

If the supplier does not make delivery within 30 days after the delivery date specified in this agreement or if the supplier does not begin performance of his, her or its obligations within 30 days after the commencement date specified in this agreement, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance.

If the delivery date or commencement date is not specified in this agreement and the supplier does not deliver or commence performance within 30 days after the date this agreement is entered into, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance.

In addition, there are other grounds that allow you to cancel this agreement. You may also have other rights, duties and remedies at law. For more information, you may contact the Ministry of Consumer and Business Services.

To cancel this agreement, you must give notice of cancellation to the supplier, at the address set out in the agreement, by any means that allows you to prove the date on which you gave notice. If no address is set out in the agreement, use any address of the supplier that is on record with the Government of Ontario or the Government of Canada or is known by you.

If you cancel this agreement, the supplier has fifteen (15) days to refund any payment you have made and return to you all goods delivered under a trade-in arrangement (or refund an amount equal to the trade-in allowance).

However, if you cancel this agreement after having solicited the goods or services from the supplier and having requested that delivery be made or performance be commenced within ten (10) days after the date this agreement is entered into, the supplier is entitled to reasonable compensation for the goods and services that you received before the earlier of the 11th day after the date this agreement was entered into and the date on which you gave notice of cancellation to the supplier, except goods that can be repossessed by or returned to the supplier.

(3) If the consumer is to receive goods under the agreement, the statement mentioned in paragraph 11 of subsection (1) shall also set out the following:

If the supplier requests in writing repossession of any goods that came into your possession under the agreement, you must return the goods to the supplier’s address, or allow one of the following persons to repossess the goods at your address:

The supplier.

A person designated in writing by the supplier.

If you cancel this agreement, you must take reasonable care of any goods that came into your possession under the agreement until one of the following happens:

The supplier repossesses the goods.

The supplier has been given a reasonable opportunity to repossess the goods and twenty-one (21) days have passed since the agreement was cancelled.

You return the goods.

The supplier directs you in writing to destroy the goods and you do so in accordance with the supplier’s instructions.

(b) The direct agreement Shazam Construction provided to Muhammad Memon did not contained the prescribed information

[69] The direct agreement between Shazam Construction and Muhammad was entered at trial as Exhibit #1. That agreement document had been prepared by Azam Khan, a representative Shazam Construction, and provided to Mohammed Memon on December 3, 2019. But more importantly, the direct agreement provided to Memon does not contain the prescribed information as required under s. 35 of O. Reg. 17/05, namely:

(1) That the agreement document that Shazam Construction provided to Mohammed Memon did not include the date of the agreement, which is contrary to s. 35(1)(5).

(2) That the agreement document that Shazam Construction provided to Mohammed Memon did not include the address of the premises from which Shazam conducts business, which is contrary to s. 35(1)(3).

(3) That the agreement document that Shazam Construction provided to Mohammed Memon did not include the statement entitled, “Your Rights under the Consumer Protection Act, 2002”, which are contrary to ss. 35(1)(11) and 35(2).

[70] This means that the direct agreement provided by Shazam Construction to Muhammad Memon on December 3, 2019 does not comply with the regulations. And, for the purposes of ss. 35(1) and (2) of O. Reg. 17/05, only one delict is required for the prosecution to have made out in counts #8 and #11 beyond a reasonable doubt. In this case, there were separate infractions of the legislation, each of which would satisfy the prosecution's burden of proof.

[71] Ergo, the prosecution has proven beyond a reasonable doubt that Shazam Construction has committed the actus reus of the offence of “failing to provide a direct agreement with the prescribed information to the consumer. Mohammed Memon”, on December 3, 2019 in the City of Brampton, contrary to s. 42(1) of the Consumer Protection Act, 2002.

(3) Due Diligence Defence For Shazam Construction In Respect To The “Improper Agreement” Offence

[72] Azam Khan testified that the document that had been provided to Mohammed Memon on December 3, 2019 was only a quote and not a formal agreement that Azam Khan would prepare and give to his clients. Moreover, Azam Khan also testified that since Mohammed Memon did not want to pay the required taxes for the construction of a basement apartment for Memon, then a formal agreement under the Shazam Construction name would only be provided to Memon if Memon had agreed to pay the taxes. As such, Azam Khan said that a formal agreement had not been prepared for Mohammed Khan.

[73] Moreover, Shazam Construction and Memon had agreed to an “under the table” cash arrangement to construct a basement apartment in Memon’s house, as Memon did not want to pay any applicable taxes. And even though the agreement to construct the basement apartment would be for cash, Memon still wanted their “under the table” arrangement to be evidenced by a written agreement. Memon’s clear desire for a written agreement to be provided and signed by the supplier is substantiated by p. 2 of the text messages, where Memon’s very first text message to Azam Khan dated December 2nd, 2019, stated the following:

“Dear, can you come tomorrow in the evening for the signing of papers?”

[74] Furthermore, Memon’s insistence of the agreement to construct the basement apartment to be reduce to writing is consistent with Memon's testimony that Memon had asked Azam Khan to sign page 1 and page 2 of the agreement. Additionally, Memon said he had asked Azam Khan to write down details of their agreement on page 3 of the agreement and page 3 of the agreement exists solely because Menon had requested those details to be in writing. Moreover, despite Azam Khan’s suggestion that Memon had informed Khan that Khan did not need to bring in a contract Memon had testified that he had not made that statement to Azam Khan.

[75] Accordingly, even though Muhammad Memon had wanted to pay cash to avoid paying any taxes, the text message dated December 2, 2019 5:30 p.m. and 5:31 p.m. from Memon to Shazam Construction on p. 2 of Exhibit #3 shows that Memon had very much wanted a written agreement in respect to the construction of the basement apartment:

“Dear can you come tomorrow in the evening … For the signing of papers”

[76] However, by virtue of s. 2(1) of the Consumer Protection Act, 2002, all consumer transactions between a supplier of services to a consumer for monetary compensation that is located in Ontario and that are not exempted under s. 2(2) is governed by the Consumer Protection Act, 2002, even “under the table” transactions between a supplier and a consumer to construct a basement apartment:

Application

2(1) Subject to this section, this Act applies in respect of all consumer transactions if the consumer or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place.

Exceptions

(2) This Act does not apply in respect of,

(a) consumer transactions regulated under the Securities Act;

(b) financial services related to investment products or income securities;

(c) financial products or services regulated under the Insurance Act, the Credit Unions and Caisses Populaires Act, 2020, the Loan and Trust Corporations Act or the Mortgage Brokerages, Lenders and Administrators Act, 2006;

(d) consumer transactions regulated under the Commodity Futures Act;

(e) prescribed professional services that are regulated under a statute of Ontario;

(f) consumer transactions for the purchase, sale or lease of real property, except transactions with respect to time share agreements as defined in section 20; and

(g) consumer transactions regulated under the Residential Tenancies Act, 2006.

Same

(3) This Act does not apply to the supply of a public utility or to any charge for the transmission, distribution or storage of gas as defined in the Ontario Energy Board Act, 1998 if such charge has been approved by the Ontario Energy Board.

[77] Moreover, s. 7(1) of the Consumer Protection Act, 2002 provides that even if a supplier and a consumer enter into an agreement or waiver of any rights given to a consumer under the Consumer Protection Act, 2002, the substantive and procedural rights given under the Act would still apply despite any agreement or waiver to the contrary:

No waiver of substantive and procedural rights

7(1) The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary.

[78] Consequently, even where Memon and Azam Khan had agreed to an “under the table” transaction where Memon would not pay any taxes, the Consumer Protection Act, 2002 would still apply to the consumer transaction between Memon and Azam Khan, which means that Shazam Construction had been legally required to provide a “direct agreement to Memon that contains the prescribed information set out in s. 35 of O. Reg. 17/05. Accordingly, as there is no evidence adduced by the defendants that they had taken all reasonable care to avoid committing or preventing the offence of failing to provide a direct agreement with the prescribed information to Mohammed Memon or that they had reasonably believed in a mistaken set of facts, then neither Shazam Construction nor Mariyam Khan have met their burden in proving the defence of due diligence on a balance of probabilities.

[79] In addition, there is no evidence of due diligence or reasonable care on the part of Shazam Construction in avoiding committing the offence of “fail to deliver to Muhammad Memon a direct agreement containing the information required by s. 35 of Ont. Reg. 17/05” on December 3, 2019, in the City of Brampton.

[80] Accordingly, based on the lack of certain required information that had to be included in the direct agreement that had been provided to Muhammad Memon on December 3, 2019 (Exhibit #1), Shazam Construction is guilty of committing the offence of “failing to deliver to Muhammad Memon, a consumer, a direct agreement containing the information required by s. 35 of Ont. Reg. 17/05” on December 3, 2019, in the City of Brampton, contrary to 42(1) of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Schedule A, as amended, and thereby committed an offence contrary to s. 116(2) of the Consumer Protection Act, 2002.

(4) Did The Mariyam Khan, The Director Of Shazam Construction Fail To Ensure That The Consumer, Muhammad Memon, Was Provided With A Proper Direct Agreement As Required Under S. 35 Of [Ontario Regulation 17/05](https://www.canlii.org/en/on/laws/regu/o-reg-17-05/latest/o-reg-17-05.html)? (Count #11)

[81] The prosecution has proven beyond a reasonable doubt that Shazam Construction has committed the offence set out in count #8 of failing to provide a direct agreement to Muhammad Memon, a consumer, on December 3, 2019 in the City of Brampton with the informational requirements that are required and set out in s. 35 of Ont. Reg. 17/05, by not complying with ss. 35(1)(5), 35(1)(3), and 35(1)(11) and 35(2). From the direct agreement document that had been provided by Shazam Construction to the consumer Muhammad Memon on December 3, 2019, and entered in this trial as Exhibit #1, the direct agreement does not contain the prescribed requirements of s. 35 of O. Reg 17/05.

[82] In respect to the defence of due diligence, Mariyam Khan, the director of Shazam Construction did not appear for trial nor testified at the trial, so there is no evidence of any due diligence or reasonable care on her part in preventing Shazam Construction from failing to provide a proper direct agreement as required under s. 35 of Ont. Reg. 17/05 to the consumer Muhammad Memon on December 3, 2019, in the City of Brampton.

[83] Ergo, the prosecution has fulfilled its persuasive burden in proving beyond a reasonable doubt that Mariyam Khan, as the director of Shazam Construction, has committed the offence set out in count #11, on December 3, 2019, in the City of Brampton, of “failing to prevent Shazam Construction of committing the offence of failing to provide to Muhammad Memon, a consumer, a direct agreement containing the prescribed requirements set out in s. 35 of Ont. Reg. 17/05”, and s. 42(1) of the Consumer Protection Act, 2002, and thereby committed an offence under s. 116(3) of the Consumer Protection Act, 2002. Accordingly, Mariyam Khan is guilty of committing the “improper agreement” offence set out in count #11.

(C) THE “UNFAIR PRACTICE” OFFENCES IN COUNTS #9, #12, AND #14

[84] Counts #9, #12 and #14 are the “unfair practice” offences. Count #9 is related to Shazam Construction, Count #12 is related to Mariyam Khan, as the director of Shazam Construction, and Count #14 is related to Azam Khan, as a representative of Shazam Construction:

count #9:

Shazam Construction & Contracting Inc. between the 3^rd day of December 2019 and the 29^th day of May 2020 at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of engage in an unfair practice by making a false, misleading or deceptive representation to Muhammad Memon, a consumer, contrary to section 17(1) of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, and thereby committed an offence contrary to subsection 116(1)(b)(ii) of the said Act;

count #12:

Mariyam Khan being an Officer or Director of Shazam Construction & Contracting Inc., between the 3^rd day of December 2019 and the 29^th day of May 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did fail to prevent Shazam Construction & Contracting Inc. from committing the offence of engage in an unfair practice by making a false, misleading or deceptive representation to Muhammad Memon, a consumer, contrary to section 17(1) of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, and thereby committed an offence contrary to subsection 116(3) of the said Act;

count #14:

Azam Khan being a person representing Shazam Construction & Contracting Inc., between the 3^rd day of December 2019 and the 29^th day of May 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of engage in an unfair practice by making a false, misleading or deceptive representation to Muhammad Memon, a consumer, contrary to section 17(1) of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, and thereby committed an offence contrary to subsection 116(1)(b)(ii) of the said Act.

(1) Did Shazam Construction And Azam Khan Engage In An “Unfair Practice” By Making A False, Misleading, Or Deceptive Representation To The Consumer Muhammad Memon And Thereby Committed An Offence Under S. 116(1)(b)(ii) Of The [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)?

(a) What is an unfair practice within the meaning of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)?

[85] Under s. 14(1) of the Consumer Protection Act, 2002, an unfair practice occurs when a person makes a false, misleading or deceptive representation:

False, misleading or deceptive representation

14(1) It is an unfair practice for a person to make a false, misleading or deceptive representation.

[86] A “representation” is defined under s. 1 of the Consumer Protection Act, 2002, to mean:

“representation” means a representation, claim, statement, offer, request or proposal that is or purports to be,

(a) made respecting or with a view to the supplying of goods or services to consumers, or

(b) made for the purpose of receiving payment for goods or services supplied or purporting to be supplied to consumers;

[87] Moreover, s. 17(1) of the Consumer Protection Act, 2002, prohibits a person from engaging in an unfair practice; while s. 17(2) deems a person to be engaging in an unfair practice when they perform one of the acts described in sections 14, 15 or 16 of the Act:

Unfair practices prohibited

17(1) No person shall engage in an unfair practice.

One act deemed practice

(2) A person who performs one act referred to in section 14, 15 or 16 shall be deemed to be engaging in an unfair practice.

[88] In addition, s. 14(2) of the Consumer Protection Act, 2002 sets out a non-exhaustive list of the type of representations that would be considered to be a false, misleading or a deceptive representation, and if a supplier made one of these types of representations under s. 14(2) to a consumer, then the supplier would be adjudged or deemed to be engaging in an unfair practice under s. 17(1) of the Consumer Protection Act, 2002:

False, misleading or deceptive representation

14(1) It is an unfair practice for a person to make a false, misleading or deceptive representation.

Examples of false, misleading or deceptive representations

(2) Without limiting the generality of what constitutes a false, misleading or deceptive representation, the following are included as false, misleading or deceptive representations:

1. A representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or qualities they do not have.

2. A representation that the person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the person does not have.

3. A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not.

4. A representation that the goods are new, or unused, if they are not or are reconditioned or reclaimed, but the reasonable use of goods to enable the person to service, prepare, test and deliver the goods does not result in the goods being deemed to be used for the purposes of this paragraph.

5. A representation that the goods have been used to an extent that is materially different from the fact.

6. A representation that the goods or services are available for a reason that does not exist.

7. A representation that the goods or services have been supplied in accordance with a previous representation, if they have not.

8. A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed.

9. A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time.

10. A representation that a service, part, replacement or repair is needed or advisable, if it is not.

11. A representation that a specific price advantage exists, if it does not.

12. A representation that misrepresents the authority of a salesperson, representative, employee or agent to negotiate the final terms of the agreement.

13. A representation that the transaction involves or does not involve rights, remedies or obligations if the representation is false, misleading or deceptive.

14. A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive.

15. A representation that misrepresents the purpose or intent of any solicitation of or any communication with a consumer.

16. A representation that misrepresents the purpose of any charge or proposed charge.

17. A representation that misrepresents or exaggerates the benefits that are likely to flow to a consumer if the consumer helps a person obtain new or potential customers.

[89] Engaging in an unfair practice is an offense contrary to s. 116(1)(b)(ii) of the Consumer Protection Act, 2002. And similarly, under s. 116(3) a director or officer of a corporation is responsible for ensuring that the business practices of the corporation do not include unfair practices. Moreover, if a company representative commits an unfair practice within the meaning of the Consumer Protection Act, 2002, then that representative of the corporation would be responsible, like all employees, officers or directors of the corporation who engage in an unfair practice with a consumer would be responsible for committing an offence under the Consumer Protection Act, 2002.

[90] Of those 17 circumstances of representations set out in s. 14(2) that are unfair practices which have application to the case at bar, there are several unfair practices involved in the interactions between Shazam Construction and Mohammed Memon, which had occurred within the timeframe of December 3rd, 2019 to May 29^th, 2020. For the acts in which the defendants have performed, so as to deem them to be “engaging in an unfair practice”, they are the acts described in ss. 14(2)(8) and 14(2)(9) [emphasis is mine below]:

Examples of false, misleading or deceptive representations

14(2) Without limiting the generality of what constitutes a false, misleading or deceptive representation, the following are included as false, misleading or deceptive representations:

8. A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed.

9. A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time.

[91] And because the defendants have performed acts described in ss. 14(2)(8) and 14(2)(9), the prosecution contends that the defendants have contravened s. 17(1) of the Consumer Protection Act, 2002 by engaging in an unfair practice by making a false, misleading or deceptive representations to the consumers, thereby making it an offence under s. 116(1)(b)(ii) of the Act:

116(1) A person is guilty of an offence if the person,

(b) contravenes or fails to comply with,

(ii) in respect of Part III, Unfair Practices, subsection 17(1),

[92] With respect to counts #9, #12 and #14, the prosecution needs to only prove that one of these acts had occurred beyond a reasonable doubt and then the prosecution will have proven that Shazam Construction and Azam Khan, as a representative of Shazam Construction have respectively committed the “unfair practice” offences:

(1) Firstly, Azam Khan said he will be at the basement project on March 30th, 2020, to resume work, but he did not show up.

(2) Secondly, Azam Khan said he would be at the basement project on May 25th, 2020 to resume work, but he did not show up.

(3) Thirdly, Shazam Construction had abandoned the basement project and ceased communication with Muhammad Memon around May 26th, 2020.

(b) First circumstance of an “unfair practice” committed by Azam Khan and Shazam Construction to Muhammad Memon

[93] For the first unfair practice, Azam Khan had texted Muhammad Memon on March 17, 2020 and said that he would be at the basement project on March 30^th, 2020, to resume work, but Azam Khan did not show up at the basement project (see p. 6 of the text messages between Muhammad Memon and Azam Khan entered as Exhibit #3). This unfair practice would fit within the type of representation set out at s. 14(2)(9) which states that “services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time”. Ergo, Azam Khan ought to have known that the work could not be performed on March 30th, 2020, but there had been no communication from Azam Khan or anyone from Shazam Construction to Muhammad Memon that Azam Khan would not be able to attend the basement project on March 30^th, 2020. As such, the cumulative effect of Azam Khan stating he would attend to continue work on the basement project on March 30^th, 2020 and then not showing up at the project on March 30^th, 2020, and not informing Muhammad Memon that Azam Khan or anyone from Shazam Construction would not be able to attend the project on March 30^th, 2020, is an unfair practice.

(c) Second circumstance of an “unfair practice” committed by Azam Khan and Shazam Construction to Muhammad Memon

[94] For the second example of an unfair practice, Azam Khan said he would be at the project on May 25th, 2020 to resume work, but he did not show up to resume work on the basement project. This is similar to the representation made by Azam Khan that he would resume work on the basement project on March 30th, 2020.

[95] The second example would also fit within the type of representation set out at s. 14(2)(9) which states that “services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time”.

[96] From the text messages at p. 9 between Muhammad Memon and Azam Khan (Exhibit #3) dated May 26, 2020, Memon recounts what had been paid and the project being unfinished. Then Memon writes that “last time you said I will come on Monday 25th May 2020 from last two days you were not giving response”. And, from these text messages and from Memon’s testimony, Azam Khan did not show up at the basement project on May 25th, 2020, not did anyone from Shazam Construction show up at the basement project on May 25^th, 2020. Furthermore, there was no communication form Azam Khan or from anyone from Shazam Construction to Muhammad Memon about Azam Khan’s or anyone from Shazam Construction’s inability to show up at the basement project on May 25^th, 2020. And again Memon was left effectively with an unfinished project.

[97] Ergo, the representation by Azam Khan that he would be at the project on May 25th, 2020, and then not showing up on that day is an unfair practice as contemplated by ss. 14(2)(8) and 14(2)(9) of the Consumer Protection Act, 2002, since it is a representation that construction services will be performed and at a specific time when the person making the representation ought to know they cannot be performed.

(d) Third circumstance of an “unfair practice” committed by Azam Khan and Shazam Construction to Muhammad Memon

[98] The third example of an unfair practice is the cessation of all communication by Azam Khan and by Shazam Construction to Muhammad Memon around May 26th, 2020. From the text messages entered as Exhibit #3 and from Memon's testimony, Memon has stopped hearing from Azam Khan entirely around May 26th, 2020. Nor did Muhammad Memon hear from anyone else from Shazam Construction, so that all communication from Shazam Construction had simply ceased.

[99] Furthermore, at the core of the Consumer Protection Act, 2002 is a requirement for fair communication between a supplier and a consumer.

[100] Therefore, the abandonment of the project by Azam Khan, a representative of Shazam Construction and by Shazam Construction, and the silence that followed constitutes an unfair practice, as it effectively ends the supplier-consumer relationship in a one-sided manner without the consumer even being aware that the relationship has ended. And, where the consumer is unaware when the relationship had ended or why or even that it has ended at all, then the consumer would have no opportunity to understand or respond and there would be no recourse for the consumer. Accordingly, such treatment that Muhammad Memon had received from Azam Khan and Shazam Construction would be an unfair practice.

[101] Furthermore, Azam Khan had testified at the trial on November 17th, 2023, that, “It wasn't my intention to abandon the job”. This would an admission by Azam Khan that Khan had known that his abandonment of the basement project was an unfair practice, otherwise, Khan would not have made the statement at all in the context of the present trial, which admission would have been ultimately based on the text message communication that had occurred between Muhammad Memon and Azam Khan about the unfinished project. Therefore, Azam Khan and Shazam Construction’s abandonment of the basement project would have occurred between the period from December 3rd, 2019 and May 29th, 2020.

[102] In addition, Azam Khan’s actions in informing Muhammad Memon by text message that Khan would be at the project on March 30^th, 2020, to resume work on two occasions and then not show up is an “unfair practice” as contemplated by the Consumer Protection Act, 2002, as it was a representation that a part of Shazam Construction's services could be performed, when the person making the representation ought to know, they could not be performed.

[103] Furthermore, both Shazam Construction and Azam Khan have been charged with engaging in an unfair practice by making a false, misleading or deceptive representation respectively to Muhammad Memon, which is contrary to section 17(1) of the Consumer Protection Act, 2002.

[104] Section 17(1) of the Consumer Protection Act, 2002 legally prohibits Shazam Construction or Azam Khan, as a representative of Shazam Construction, from engaging in an unfair practice in relation to Muhammad Memon, as a consumer. Furthermore, by virtue of s. 17(2), if Shazam Construction or Azam Khan, as a representative of Shazam Construction, does engage in one of the acts or omissions listed in sections 14, 15, or 16 of the Consumer Protection Act, 2002, then Shazam Construction or Azam Khan, as a representative of Shazam Construction, would be adjudged or deemed to be engaging in an unfair practice.

[105] Accordingly, the prosecution has proven beyond a reasonable doubt that the corporate defendant, Shazam Construction, has committed the actus reus of the offence contained in count #9 of “did engage in an unfair practice in relation to Muhammad Memon, a consumer, by making a false, misleading or deceptive representation” between December 3, 2019 and May 29, 2020 in the City of Brampton, as detailed under ss. 14(2)(8) and 14(2)(9) of the Consumer Protection Act, 2002, contrary to s. 17(1) of the Consumer Protection Act, 2002.

[106] In addition, since Azam Khan was the person who sent those text messages that Khan would be at the project on March 30^th, 2020 and on May 25^th, 2020, to resume work, but then had failed to show up, then the prosecution has also proven beyond a reasonable doubt that Azam Khan, being a representative of Shazam Construction, has committed the actus reus of the offence set out in count #14 of “engaging in an unfair practice in relation to Muhammad Memon, a consumer, by making a false, misleading or deceptive representation” between December 3, 2019 and May 29, 2020 in the City of Brampton, as detailed under ss. 14(2)(8) and 14(2)(9) of the Consumer Protection Act, 2002, contrary to s. 17(1) of the Consumer Protection Act, 2002

(e) Due diligence defence for Shazam Construction and for Azam Khan in respect to the “unfair practice” offences

[107] For the due diligence defence in respect to the “unfair practice” offences for Shazam Construction and for Azam Khan, Azam Khan had testified that he had contracted COVID-19 and had been very ill for several months during March to May of 2020, as vaccines had not yet been developed and made available for use by the public. In addition, Azam Khan also contends that there were government stay-at-home orders during that period, which prohibited contractors from attending residential houses to do any work ,and also that municipal building inspector would also not attend residential houses to do inspections.

[108] In addition, to prove he had COVID-19 during the period of March to May of 2020, Azam Khan had provided a document from a homeopathic doctor which advised Azam Khan to undertake a COVID-19 investigation. However, this is not a diagnosis that Azam Khan had contracted COVID-19, nor was there any further documentation provided in evidence on this issue. Furthermore, regardless of whether or not Azam Khan had COVID-19 or not, on March 30th, 2020 and on May 25^th, 2020, Khan did not attend the project as promised on those two occasions and had made no further communication to the consumer to advise of the reason for not showing up at the basement project on March 30, 2020 or on May 25^th, 2020. In addition, there had been no communication from anyone else from Shazam Construction to Muhammad Memon about why no one from Shazam Construction would be showing up to work on the basement project on March 30, 2020 or on May 25^th, 2020.

[109] Furthermore, in respect to the contention by Azam Khan that government stay-at-home orders had prohibited Azam Khan or anyone from Shazam Construction from attending Muhammad Memon’s house to do any work or municipal building inspectors from attending residential houses to do inspections, Azam Khan had been mistaken when those stay-at-home orders had prohibited contractors from attending residential work sites that had applied to building contractors during the pandemic or when they applied to the performance of residential building inspections by municipal building inspectors.[^1] During March and April of 2020, the closure orders in respect to non-essential businesses by the Ontario government did not apply to residential construction projects already started and near completion.

[110] Consequently, the defendants have failed to prove on a balance of probabilities the defence of due diligence or that all reasonable care had been undertaken by Shazam Construction or by Azam Khan, as a representative of Shazam Construction, in avoiding committing the actus reus of the offence set out in counts #9 or #14, respectively, of “engaging in an unfair practice in relation to Muhammad Memon, a consumer, by making a false, misleading or deceptive representation” to Muhammad Memon between December 3, 2019 and May 29, 2020, in the City of Brampton, contrary to s. 17(1) of the Consumer Protection Act, 2002. Therefore, Shazam Construction is guilty of committing the “unfair practice” offence set out in count #9 and Azam Khan is guilty of committing the “unfair practice” offence set out in count #14.

(f) Did Mariyam Khan, the director of Shazam Construction, fail to prevent Shazam Construction from engaging in an unfair practice by making a false, misleading, or deceptive representation respectively to the consumer Muhammad Memon and thereby committed an offence under [s. 116(3)](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html) of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)? (count #12)

[111] Under s. 116(3) of the Consumer Protection Act, 2002, an officer or director of a corporation is guilty of an offence if he or she fails to take reasonable care to prevent the corporation from engaging in an unfair practice, contrary to s. 116(1)(b)(ii) of the Act:

Corporation

116(3) An officer or director of a corporation is guilty of an offence if he or she fails to take reasonable care to prevent the corporation from committing an offence mentioned in subsection (1) or (2).

[112] As the prosecution has proven beyond a reasonable doubt that Shazam Construction has committed the offences set out in counts #9 of “engaging in an unfair practice by making a false, misleading or deceptive representations to the consumer, Muhammad Memon, contrary to s. 17(1) of the Consumer Protection Act, 2002, then the prosecution has likewise proven beyond a reasonable doubt that Mariyam Khan, as the director of Shazam Construction, has committed the actus reus of the offence contained in count #12 of “failing to prevent Shazam Construction from engaging in an unfair practice by making a false, misleading or deceptive representations respectively to the consumer, Muhammad Memon, between December 3, 2019 and May 29, 2020, in the City of Brampton, contrary to s. 17(1) of the Consumer Protection Act, 2002.

[113] In respect to the defence of due diligence, Mariyam Khan, the director of Shazam Construction did not appear for trial nor testified at the trial, so there is no evidence of any due diligence or reasonable care on her part in preventing Shazam Construction from engaging in an unfair practice by making a false, misleading or deceptive representations to the consumer, Muhammad Memon. Therefore, Mariyam Khan, as the director of Shazam Construction, is guilty of committing the offence set out in count #12.

(D) THE “FAIL TO REFUND” OFFENCES IN COUNTS #10 AND #13

[114] Counts #10 and #13 are the “fail to refund” offences. Count #10 is related to the corporate defendant, Shazam Construction, while count #13 is related to Mariyam Khan, who is the director of Shazam Construction:

count #10:

Shazam Construction & Contracting Inc. on or about the 15^th day of June 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did commit the offence of fail to refund Muhammad Memon, a consumer, within 15 days after the date the said consumer gave notice of cancellation of a consumer agreement, in accordance with the requirements prescribed by section 79(1) of Ontario Regulation 17/05 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to Section 96(1)(a) of the said Act, and thereby committed an offence contrary subsection 116(1)(b)(viii) of the said Act;

count #13:

Mariyam Khan being an Officer or Director of Shazam Construction & Contracting Inc., on or about the 15^th day of June 2020, at the City of Brampton, in the Central West Region, and elsewhere in the province of Ontario did fail to prevent Shazam Construction & Contracting Inc. from committing the offence of fail to refund to Muhammad Memon, a consumer, within 15 days after the date the said consumer gave notice of cancellation of a consumer agreement, in accordance with the requirements prescribed by s. 79(1) of Ontario Regulation 17/05 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to Section 96(1)(a) of the said Act, and thereby committed an offence contrary to subsection 116(3) of the said Act;

(1) Did Shazam Construction Fail To Provide A Refund Back To The Consumer Muhammad Memon After He Had Given Notice Of Cancellation Of The Direct Agreement And Requested A Refund?

(a) Under What Situations May A Consumer Cancel A Direct Agreement?

[115] First of all, s. 94 of the Consumer Protection Act, 2002, provides that where a consumer has a right to cancel a consumer agreement under the Act, then the consumer has to comply with the general procedure or requirements set out in s. 92 for the consumer to provide the notice of cancellation to the supplier [emphasis is mine below]:

Cancellation

94(1) If a consumer has a right to cancel a consumer agreement under this Act, the consumer may cancel the agreement by giving notice in accordance with section 92.

Effective time

(2) The cancellation takes effect when the consumer gives notice.

[116] Moreover, there are 3 circumstances under which a consumer is entitled to cancel a direct agreement under the Consumer Protection Act, 2002:

(1) under s. 43(1) during the 10-day cooling off period

(2) under s. 43(2) if the supplier fails to provide a direct agreement containing the required information prescribed under s. 42

(3) under s. 18(1) after or while the supplier has engaged in an unfair practice

(i) Cancelling the direct agreement during the 10-day cooling off period

[117] Under s. 43(1) of the Consumer Protection Act, 2002, a consumer may cancel a direct agreement for future work for any reason within 10 days after receiving a copy of the direct agreement. This 10-day cooling period would also apply to direct agreements where the work had already been completed by the supplier:

Cancellation: cooling-off period

43(1) A consumer may, without any reason, cancel a direct agreement at any time from the date of entering into the agreement until 10 days after receiving the written copy of the agreement.

(ii) Cancelling the direct agreement if the supplier fails to provide a direct agreement containing the required information prescribed under s. 42

[118] Under s. 43(2) of the Consumer Protection Act, 2002, a consumer may cancel a direct agreement within one year after the date of entering into the agreement if the consumer does not receive a copy of the agreement that meets the requirements prescribed under s. 42 of the Consumer Protection Act, 2002. This right to cancel under s. 43(2) would also apply to direct agreements where the work had already been completed by the supplier:

Cancellation: failure to meet requirements

43(2) In addition to the right under subsection (1), a consumer may cancel a direct agreement within one year after the date of entering into the agreement if the consumer does not receive a copy of the agreement that meets the requirements under section 42.

(iii) Cancelling the direct agreement when the supplier has engaged in an unfair practice

[119] Under ss. 18(1) and 18(3) of the Consumer Protection Act, 2002, a consumer may cancel a direct agreement within one year after the date of entering into the agreement if the consumer has entered into the agreement after or while the supplier has engaged in an unfair practice [emphasis is mine below]:

Rescinding agreement

18(1) Any agreement, whether written, oral or implied, entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and the consumer is entitled to any remedy that is available in law, including damages.

Remedy if rescission not possible

18(2) A consumer is entitled to recover the amount by which the consumer’s payment under the agreement exceeds the value that the goods or services have to the consumer or to recover damages, or both, if rescission of the agreement under subsection (1) is not possible,

(a) because the return or restitution of the goods or services is no longer possible; or

(b) because rescission would deprive a third party of a right in the subject-matter of the agreement that the third party has acquired in good faith and for value.

Notice

18(3) A consumer must give notice within one year after entering into the agreement if,

(a) the consumer seeks to rescind an agreement under subsection (1); or

(b) the consumer seeks recovery under subsection (2), if rescission is not possible.

Form of notice

18(4) The consumer may express notice in any way as long as it indicates the intention of the consumer to rescind the agreement or to seek recovery where rescission is not possible and the reasons for so doing and the notice meets any requirements that may be prescribed.

Delivery of notice

18(5) Notice may be delivered by any means.

When notice given

18(6) If notice is delivered other than by personal service, the notice shall be deemed to have been given when sent.

Address

18(7) The consumer may send or deliver the notice to the person with whom the consumer contracted at the address set out in the agreement or, if the consumer did not receive a written copy of the agreement or the address of the person was not set out in the agreement, the consumer may send or deliver the notice,

(a) to any address of the person on record with the Government of Ontario or the Government of Canada; or

(b) to an address of the person known by the consumer.

[120] Since the defendants had failed to provide a direct agreement to the consumer, Muhammad Memon, containing the information prescribed by s. 42 of the Consumer Protection Act, 2002 and as required under s. 35 of O. Reg. 17/05, then Muhammad Memon was entitled to cancel the direct agreement under s. 43(2). Moreover, Muhammad Memon had the right to cancel the direct agreement with Shazam Construction within one year of signing or entering the direct agreement, since the direct agreement had not complied with the prescribed requirements under ss. 35(1)(3), 35(1)(5), 35(1)(11), and 35(2) of O. Reg. 17/05.

[121] Under s. 96(1)(a) of the Consumer Protection Act, 2002, the obligation for a supplier to provide a consumer with the refund of any payment made by the consumer under the consumer agreement is triggered by a consumer's cancellation of that consumer agreement [emphasis is mine below]:

Obligations on cancellation

96(1) If a consumer cancels a consumer agreement, the supplier shall, in accordance with the prescribed requirements,

(a) refund to the consumer any payment made under the agreement or any related agreement; and

(b) return to the consumer in a condition substantially similar to when they were delivered all goods delivered under a trade-in arrangement or refund to the consumer an amount equal to the trade-in allowance.

Repossession or return of goods

(2) Upon cancelling a consumer agreement, the consumer, in accordance with the prescribed requirements and in the prescribed manner, shall permit the goods that came into the consumer’s possession under the agreement or a related agreement to be repossessed, shall return the goods or shall deal with them in such manner as may be prescribed.

Reasonable care

(3) If a consumer cancels a consumer agreement, the consumer shall take reasonable care of the goods that came into the possession of the consumer under the agreement or a related agreement for the prescribed period.

To whom obligation owed

(4) The consumer owes the obligation described in subsection (3) to the person entitled to possession of the goods at the time in question.

No further obligation

(5) Compliance with this section discharges the consumer from all obligations relating to the goods and the consumer is under no other obligation, whether arising by contract or otherwise, to take care of the goods.

Right of action

(6) If a consumer has cancelled a consumer agreement and the supplier has not met the supplier’s obligations under subsection (1), the consumer may commence an action.

Same

(7) If a consumer has cancelled a consumer agreement and has not met the consumer’s obligations under this section, the supplier or the person to whom the obligation is owed may commence an action.

[122] Where the consumer has a right to cancel a consumer agreement under the Consumer Protection Act, 2002, the consumer may cancel the agreement by giving notice in accordance with s. 92 of the Act, and by virtue of s. 94(2) of the Act the cancellation takes effect when the consumer gives notice [emphasis is mine below]:

Cancellation

94(1) If a consumer has a right to cancel a consumer agreement under this Act, the consumer may cancel the agreement by giving notice in accordance with section 92.

Effective time

(2) The cancellation takes effect when the consumer gives notice.

[123] Furthermore, s. 95 of the Consumer Protection Act, 2002, provides that when the consumer agreement is cancelled, the cancellation operates to cancel as if the agreement and all related agreements had never existed [emphasis is mine below]:

Effect of cancellation

95 The cancellation of a consumer agreement in accordance with this Act operates to cancel, as if they never existed,

(a) the consumer agreement;

(b) all related agreements;

(c) all guarantees given in respect of money payable under the consumer agreement;

(d) all security given by the consumer or a guarantor in respect of money payable under the consumer agreement; and

(e) all credit agreements, as defined in Part VII, and other payment instruments, including promissory notes,

(i) extended, arranged or facilitated by the person with whom the consumer reached the consumer agreement, or

(ii) otherwise related to the consumer agreement.

[124] Moreover, s. 79(1) of Ont. Reg. 17/05 specifies that the supplier, who is required to provide a refund, must refund any payment made by the consumer under the consumer agreement within 15 days of the date that the consumer gives notice under s. 92 of the Consumer Protection Act, 2002 of the cancellation of the consumer agreement to the supplier [emphasis is mine below]:

Supplier obligations on cancellation

79(1) A supplier who is required to comply with subsection 96(1) of the Act shall do so within 15 days after the day the consumer gives notice to the supplier in accordance with section 92 of the Act that the consumer is cancelling the consumer agreement.

(2) A supplier who is required to return goods to a consumer under clause 96 (1)(b) of the Act shall return the goods to the consumer’s address.

[125] More importantly, s. 92(3) of the Consumer Protection Act, 2002 states that unless the regulations require otherwise, the notice of cancellation of the consumer agreement by the consumer to the supplier may be oral or in writing and may be given by any means [emphasis is mine below]:

Form of consumer notice

92(1) If this Act requires a consumer to give notice to a supplier to request a remedy, the consumer may do so by giving notice in accordance with this section.

Same

(2) The notice may be expressed in any way, as long as it indicates the intention of the consumer to seek the remedy being requested and complies with any requirements that may be prescribed.

Giving notice

(3) Unless the regulations require otherwise, the notice may be oral or in writing and may be given by any means.

Notice given when sent

(4) If notice in writing is given other than by personal service, the notice shall be deemed to be given when sent.

Address

(5) The consumer may send or deliver the notice to the address set out in a consumer agreement or, if the consumer did not receive a written copy of a consumer agreement or the address was not set out in the written agreement, the consumer may send or deliver the notice,

(a) to any address of the supplier on record with the Government of Ontario or the Government of Canada; or

(b) to an address of the supplier known by the consumer.

[126] In addition, providing the refund to the consumer within 15 days of the notice of cancellation of the consumer agreement is a responsibility of the supplier, as well as the officers and directors of the supplier if the supplier is a corporate entity.

(b) Was Muhammad Memon entitled to a refund from Shazam Construction?

[127] Shazam Construction had failed to provide a proper direct agreement containing the prescribed information and by virtue of s. 43(2) of the Consumer Protection Act, 2002, Muhammad Memon was entitled to cancel the direct agreement within one year of the date of December 3, 2019, when Muhammad Memon had entered into the direct agreement with Shazam Construction.

[128] Moreover, Muhammad Memon did not receive the completed basement apartment and the installation of the 3 basement windows from Shazam Construction, since Shazam Construction and Azam Khan had stopped communicating with Menon sometime around May 26^th, 2020, nor did anyone from Shazam Construction or Azam Khan return to Memon’s house to work on the basement project, and had in essence abandoned the project, and this abandonment of the project also caused Memon to hire other contractors at additional costs to redo Shazam Construction’s work on Memon’s basement apartment and to complete the basement project.

(c) When did Muhammad Memon give Shazam Construction the notice of cancellation of the direct agreement?

[129] From the text messages entered as Exhibit #3, between the consumer, Mohammed Memon, and Azam Khan, a representative of Shazam Construction, Mohammed Memon had texted Azam Khan on March 17, 2020 and on May 26th, 2020, and provided notice to Khan on both occasions about cancelling the consumer agreement between Memon and Shazam Construction:

(i) The first notice of cancellation is dated March 17th, 2020 and given by text message (p. 5 of the text messages in Exhibit #3):

[130] Memon had informed Azam Khan on March 17^th, 2020, that if Khan was not going to install the 3 basement windows then Azam Khan should send Memon cancellations … [and] returned me advanced money (see p. 5 of the text messages between Muhammad Memon and Azam Khan entered as Exhibit #3):

“If you are not doing , send me cancellations

Returned me advanced money”

[131] Ergo, for the first notice of cancellation given by Muhammad Memon on March 17^th, 2020, Shazam Construction would have been legally required to refund any money that Mohammed Memon had paid to Shazam Construction under the consumer agreement by April 2^nd, 2020, which is 15 days after the cancellation notice had been given on March 17^th, 2020.

(ii) The second notice of cancellation is dated May 26th, 2020 and given by text message (p. 10 of the text messages in Exhibit #3):

[132] In the text messages on pp. 9 and 10 of the text messages between Muhammad Memon and Azam Khan entered as Exhibit #3, Muhammad Memon texts Azam Khan on May 26, 2020, and writes:

“Last time you said I will come on Monday 25 May 2020.

From last two days you are not giving response on the phone

So now I am giving to you 48 hours please come and resolve this matter brotherly, other wise I’m free to contact another contractor regarding completing the basement work and legal procedures

Will adopt on your signed contract/agreement”

[133] Hence, Muhammad Memon’s second notice of cancellation of the consumer agreement came into effect on May 28th, 2020, which is 48 hours after that text message had been sent by Mohammed Menon to Azam Khan on May 26^th, 2020. Therefore, the 15-day period for Shazam Construction to make the refund would have expired on June 15th, 2020.

[134] As such, under s. 92(4), the text messages sent by Muhammad Memon to Azam Khan, a representative of Shazam Construction, regarding Memon’s cancellation of the direct agreement on two occasions, the notice of cancellation shall be deemed to be given to Shazam Construction on May 28th, 2020, which is 48 hours after Muhammad Memon said he would give Azam Khan 48 hours to resolve the matter.

[135] In addition, Muhammad Memon had complied with s. 92(5) when Memon had sent the notice of cancellation by text message to telephone number (416) 786-0018 that was addressed to Azam Khan, which is the same telephone number that was provided in the direct agreement that had been provided to Muhammad Memon on Shazam Construction letterhead (Exhibit #1).

[136] Therefore, once Shazam Construction had been deemed to have received the notice of cancellation on May 28th, 2020, that Muhammad Memon was cancelling the direct agreement with Shazam Construction, then Shazam Construction, as the supplier, had to comply with s. 96(1) and refund any payments made by Muhammad Memon to Shazam Construction under the direct agreement made on or about December 3, 2019. Furthermore, Shazam Construction had to comply with s. 79(1) of Ont. Reg. 17/05, which required Shazam Construction to refund Muhammad Memon’s money back to him within 15 days of the date on which Memon had given notice to Shazam Construction that he was cancelling the agreement [emphasis is mine below]:

Supplier obligations on cancellation

79(1) A supplier who is required to comply with subsection 96(1) of the Act shall do so within 15 days after the day the consumer gives notice to the supplier in accordance with section 92 of the Act that the consumer is cancelling the consumer agreement.

[137] Hence, Shazam Construction was obligated to refund Muhammad Memon’s money paid to Shazam Construction under the direct agreement made on or about December 3, 2019, back to him by June 15th, 2020, which is 15 days after the cancellation notice date that became effective on May 28th, 2020 (the second cancellation notice made by Muhammad Memon).

(d) If Shazam Construction is required to provide a refund to Muhammad Memon what is “reasonable compensation” that Shazam Construction can deduct from the refund amount?

[138] A supplier is entitled under s. 83(2)(b) of O. Reg. 17/05 to deduct “reasonable compensation” from the refund that would have to be provided to a consumer for services that have been provided by the supplier to the consumer:

Limitations on cancellation of direct agreement

83(1) This section applies upon the cancellation by a consumer of a direct agreement under section 43 of the Act, if the consumer,

(a) solicited the goods or services from the supplier; and

(b) requested that, within 10 days after the day the direct agreement is entered into, the supplier make delivery or commence performance under the direct agreement.

(2) In the circumstances described in subsection (1), the supplier is entitled to reasonable compensation for,

(a) goods,

(i) that were received by the consumer under the direct agreement before the earlier of,

(A) the 11th day after the day the direct agreement was entered into, and

(B) the time the consumer gives notice to the supplier in accordance with section 92 of the Act that the consumer is cancelling the direct agreement, and

(ii) that cannot be repossessed by or returned to the supplier because they,

(A) have been used up,

(B) have perished, or

(C) have become such an integral part of other property that it would be impractical to remove them from the other property; and

(b) services that were received by the consumer under the direct agreement before the earlier of,

(i) the 11th day after the day the direct agreement was entered into, and

(ii) the time the consumer gives notice to the supplier in accordance with section 92 of the Act that the consumer is cancelling the direct agreement.

(3) If a supplier is entitled to reasonable compensation under this section with respect to goods described in sub-subclause (2) (a) (ii) (C) or with respect to services, the obligations owed to the consumer by any person with respect to those goods or services, under the direct agreement, under a related agreement or at law, continue despite the cancellation of the direct agreement and the related agreement.

(4) A supplier who is entitled to reasonable compensation under this section may,

(a) deduct the amount of the reasonable compensation to which the supplier is entitled from the refund, if any, that the supplier is required to give the consumer under clause 96 (1) (a) of the Act;

(b) recover the amount of the reasonable compensation to which the supplier is entitled from the consumer; or

(c) deduct part of the amount of the reasonable compensation to which the supplier is entitled from the refund, if any, that the supplier is required to give the consumer under clause 96 (1) (a) of the Act and recover the balance from the consumer.

(5) This section applies pursuant to subsection 20 (2) of the Act.

(e) Did Shazam Construction, as the supplier, refund any money back to Muhammad Memon?

[139] Muhammad Memon testified that he did not receive any refund of any amount from Shazam Construction. Accordingly, the prosecution has proven that Shazam Construction has committed the actus reus beyond a reasonable doubt of the offence set out in count #10 of “failing to provide a refund to Muhammad Memon, a consumer, within 15 days of the notice of cancellation and request for refund”, then the prosecution has proven beyond a reasonable doubt that Shazam Construction on or about the 15th day of June 2020, at the City of Brampton, has committed the actus reus of the offence set out in count #10 of “failing to provide a refund to a consumer within 15 days after the date the said consumer gave notice of cancellation of a consumer agreement, in accordance with the requirements prescribed by section 79(1) of Ontario Regulation 17/05 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, as amended, contrary to Section 96(1)(a) of the said Act, and thereby committed an offence contrary subsection 116(1)(b)(viii) of the said Act.

[140] Moreover, there is no evidence that Shazam Construction has taken all reasonable care in avoiding committing the offence of “failing to provide a refund” to Muhammad Memon, a consumer, on or about June 15, 2020 in the City of Brampton. Ergo, Shazam Construction is guilty of committing the “fail to refund” offence set out in count #10.

(f) Did Mariyam Khan, the director of Shazam Construction, fail to prevent Shazam Construction from committing the offence of failing to refund payment to Muhammad Memon, a consumer, within fifteen days of being given notice of cancellation of the consumer agreement on May 28th, 2020, thereby committing an offence under [s. 116(3)](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html) of the [Consumer Protection Act, 2002](https://www.canlii.org/en/on/laws/stat/so-2002-c-30-sch-a/latest/so-2002-c-30-sch-a.html)? (count #13)

[141] As a director of Shazam Construction, Mariyam Khan had the legal obligation to ensure that Shazam Construction complies with its legal obligations under the Consumer Protection Act, 2002, which includes ensuring that Shazam Construction refunds money back to consumers when Shazam Construction is legally obligated to make those refunds. And, since Muhammad Memon did not receive any money back from Shazam Construction, Mariyam Khan would have failed in her legal obligation to ensure that Shazam Construction made the refund of any money back to Muhammad Memon and to prevent Shazam Construction from failing to refund to Muhammad Memon, a consumer, within 15 days of being given notice of cancellation of the consumer agreement by Muhammad Memon that became effective on May 28, 2020.

[142] Ergo, the prosecution has proven beyond a reasonable doubt that Mariyam Khan, as a director of Shazam Construction, on or about June 15, 2020, in the City of Brampton has committed the actus reus of the offence set out in count #13 of “failing to prevent Shazam Construction from failing to refund Muhammad Memon, a consumer, within 15 days of being given notice of cancellation of the consumer agreement by Muhammad Memon”.

[143] In respect to the defence of due diligence, Mariyam Khan, the director of Shazam Construction did not appear for trial nor testified at the trial, so there is no evidence of any due diligence or reasonable care on her part in preventing Shazam Construction from failing to refund payment to Muhammad Memon, a consumer, within fifteen days of being given notice of cancellation of the direct agreement on May 28th, 2020.

[144] Therefore, the prosecution has met its burden in proving beyond a reasonable doubt that Mariyam Khan, the director of Shazam Construction, had on or about June 15, 2020 in the City of Brampton committed the offence of “did fail to prevent Shazam Construction from failing to refund Muhammad Memon, a consumer, within 15 days of being given notice of cancellation of the consumer agreement by Muhammad Memon”, in accordance with the requirements prescribed by s. 79(1) of Ont. Reg. 17/05, contrary to s. 96(1)(a) of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A., and thereby respectively committed an offence contrary to s. 116(3) of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A. Accordingly, Mariyam Khan is guilty of committing the offence set out in count #13.

(E) THE DEFENDANTS HAVE NOT MET THEIR BURDEN IN PROVING THE DEFENCE OF DUE DILIGENCE ON A BALANCE OF PROBABILITIES

[145] Azam Khan had testified that in March of 2020, he had contracted COVID-19 and had been very ill for about two months and that he did not intend to abandon the project. To reiterate, Azam Khan was the person who did the construction work and who hired the subcontractors for Muhammad Memon’s basement project at 22 Francis Lundy Street in Brampton. This was Azam Khan’s excuse for why he did not respond to Memon’s texts or attend Memon’s house to complete the construction of the basement apartment and to install the 3 basement windows. In addition, Khan also contends that the government stay-at-home orders in regards to the pandemic also prevented him or anyone from Shazam Construction or building inspectors from attending Memon’s house to do any work or inspections on the basement apartment. Furthermore, in respect to the “fail to refund” offences, Azam Khan said that it would not be fair to refund any money back to Muhammad Memon since Azam Khan had completed very difficult and dirty work in respect to the demolition work for Memon’s basement and that there is no evidence that the work that Shazam Construction and Azam Khan had done on the basement project had been substandard, and that Shazam Construction had only made about $1,000 profit on the basement project for Muhammad Memon.

[146] On the other hand, the prosecution submits that whether or not Azam Khan was slighted by a difficult customer is not a valid defense since a valid due diligence defense must establish that Shazam Construction or that Mariyam Khan, as the director of Shazam Construction, or that Azam Khan, as a representative of Shazam Construction, had taken all reasonable care to avoid committing the 7 offences. But the prosecution submits that simply was not done.

[147] Moreover, reasonable care, for example, might have included putting the address of Shazam Construction on the written agreement provided to Muhammad Memon on December 3, 2019. In addition, another example of reasonable care would have been to communicate to Muhammad Memon when no one from Shazam Construction would be coming to Memon’s house to work on the basement project on March 30^th, 2020 or on May 25^th, 2020, or to communicate that Azam Khan was severely ill and cannot work on the project. On the other hand, Shazam Construction’s abandonment of the project would be consistent with no reasonable care being taken by Shazam Construction, instead of being consistent with all reasonable care having been taken by Shazam Construction.

[148] In regards to Azam Khan’s contention that government stay-at-home orders prohibited contractors from attending residential houses and municipal building inspectors from doing inspection, Azam Khan appears to been confused with when the stay-at-home orders actually affected residential construction projects in March and April of 2020, since residential construction projects that were already commenced and nearly completed were not included in the closure orders issued by the Ontario government for non-essential businesses.

[149] And, with respect to the refund requested by Muhammad Memon, there is no evidence that Shazam Construction or Mariyam Khan, as the director of Shazam Construction had taken all reasonable care to avoid committing the offence of failing to refund money back to Muhammad Memon, since the cancellations of the direct agreement and requests for refunds by Memon were simply ignored by them. Moreover there was no evidence adduced at trial that Shazam Construction or Mariyam Khan had communicated with Muhammad Memon about the refund or to refund any money after deducting any reasonable amount as compensation for work, goods, or services already provided by Shazam Construction to Memon.

[150] In addition, as the legal burden of proof is on the defendants to show that they had taken all reasonable care, any defense of due diligence would fail unless the defendants can prove reasonable care had been taken on a balance of probabilities. In other words, the defendants were not required to take those particular steps suggested as examples of simply putting Shazam Construction’s address on the direct agreement document entered as Exhibit #1 or by communicating with Muhammad Memon that no one from Shazam Construction would be attending Memon’s house on those promised dates to work on the basement project, but that the defendants had the legal burden to prove on a balance of probabilities that they did take all reasonable steps to avoid committing the offences that they were charged with.

[151] Moreover, Azam Khan’s testimony about contracting COVID-19 and being ill for several months, as well as the contention that government stay-at-home orders prevented anyone from Shazam Construction from attending Memon’s house to work on the basement project or for municipal building inspectors from attending to do the required inspections before Shazam Construction could continue with the project did not amount to a defense of due diligence. Ergo, Azam Khan failed to prove that he took all reasonable care and instead reinforced the defendants culpability.

[152] In addition, Azam Khan’s testimony and letter from a homeopath (Exhibit #4) had not been evidence of a clear COVID-19 diagnosis. Nor was there any evidence, as the homeopathic practitioner had suggested in his letter, that Azam Khan seek further medical attention about whether he had actually contracted COVID-19, beyond a telephone consultation with a homeopathic practitioner.

[153] Moreover, Azam Khan's testimony was that he had been confined to his room for two months, yet he admitted that he did have access to his cellphone during that time, which would have allowed Azam Khan to contact or telephone or text Muhammad Memon about possibility contracting COVID-19 and being unable to attend Memon’s house to continuing working on the basement project. In addition, Mariyam Khan, the director of Shazam Construction, could have also contacted and communicated with Muhammad Memon about Azam Khan’s illness or unavailability to attend Memon’s house to work on the basement project.

[154] As well, the communication between Muhammad Memon and Azam Khan occurred mostly by cellphone or by texts. As such, the lack of communication from anyone from Shazam Construction to Muhammad Memon to keep Memon apprised of Azam Khan’s illness or inability to work shows the lack of reasonable care by Shazam Construction, by Azam Khan, as the representative of Shazam Construction, and by Mariyam Khan, as a director of Shazam Construction, towards Muhammad Memon.

[155] Furthermore, Muhammad Memon had testified that all communication from Azam Khan or someone from Shazam Construction had stopped around May 26^th, 2020, and that Shazam Construction had abandoned the project, and that Azam Khan had also testified that “it wasn't my intention to abandon the job”, meaning that Azam Khan had recognized that this is in fact what he had done. And the mention of it in Azam Khan’s testimony further indicates that Azam Khan had recognized the unfairness of abandoning the job or Khan would not have said so in court.

[156] Azam Khan also asserted that the written document provided to Muhammad Memon on December 3, 2019 (Exhibit #1), was not a formal agreement, but that it had been only estimate. However, Azam Khan then agreed under cross-examination that nowhere in that document provided to Memon on December 3, 2019, is written the word “estimate” or “quote”. But more importantly, Muhammad Memon had testified that he understood that the document provided to Memon by Azam Khan on December 3, 2019, to be the written agreement for the construction of the basement apartment in Memon’s house located at 22 Francis Lundy Street in Brampton.

[157] Furthermore, for the direct agreement provided to the consumer in this proceeding, the defendants have failed to prove on a balance of probabilities that they took all reasonable care to provide a proper agreement to the consumers by ensuring that the written agreement that had been provided to the consumer had contained the required information, such as the address of Shazam Construction.

[158] In respect to the defence of due diligence in respect to Mariyam Khan, the director of Shazam Construction, Mariyam Khan did not appear for trial nor testified at the trial, so there is no evidence of any due diligence or reasonable care on her part in preventing Shazam Construction from failing to provide a proper direct agreement with the prescribed information to Muhammad Memon, preventing Shazam Construction from engaging in an unfair practice towards Muhammad Memon, and preventing Shazam Construction from failing to refund payment to Muhammad Memon, a consumer, within fifteen days of being given notice of cancellation of the direct agreement that became effective on May 28^th, 2020.

[159] Ergo, as the defendants have failed to prove on a balance of probabilities that they had taken all reasonable care in the circumstances to prevent these 7 offences from being committed, then convictions will be entered against Shazam Construction for counts #8, #9, and #10, while convictions will be entered against Mariyam Khan, as the director of Shazam Construction, for counts #11, #12, and #13, and a conviction will be entered against Azam Khan, as a representative of Shazam Construction, for count #14, in respect to Information #22-5478.

5. DISPOSITION

[160] Consequently, for the corporate defendant, Shazam Construction & Contracting Inc., convictions will be entered against it for committing the offences set out in counts #8, #9, and #10 on Information #22-5478.

[161] As for the defendant, Mariyam Khan, as the director of Shazam Construction & Contracting Inc., convictions will be entered against her for committing the offences set out in counts #11, #12, and #13 on Information #22-5478.

[162] As for the defendant, Azam Khan, being a representative of Shazam Construction & Contracting Inc., a conviction will be entered against him for committing the offence set out in count #14 on Information #22-5478.

Dated at the City of Brampton on June 17, 2024.

QUON J.P.

Ontario Court of Justice

[^1] On March 23, 2020, Premier Ford had ordered the closure of all non-essential businesses across the province for 14 days, but the list of businesses to close did not include liquor stores, construction projects and realty services. Then shortly after, the Ontario government ordered that on April 4^th, 2020 at 11:59 p.m. there would be further business closures and a shutdown of many construction sites in response to the coronavirus pandemic and the order is scheduled to last for 14 days. Premier Ford also announced that all industrial construction will be stopped and that only essential infrastructure-related projects will proceed and that no new residential construction will take place under the order; however, residential projects near completion will be allowed to continue.