First Place Fine Car Sales Inc. et al. v. Registrar, Motor Vehicle Dealers Act

[Indexed as: First Place Fine Car Sales Inc. v. Ontario (Motor Vehicle Dealers Act, Registrar)]

85 O.R. (3d) 361

Ontario Superior Court of Justice, Divisional Court,

Lane, Matlow, Pardu JJ.

March 22, 2007

Administrative law -- Appeals -- Standard of review -- Licence Appeal Tribunal erroneously holding that it could not substitute its opinion for that of Registrar -- Tribunal being required to make its own assessment -- Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42, s. 7.

The Licence Appeal Tribunal directed the Registrar to carry out his Proposal to refuse the registration of one of the appellants and to revoke the registration of the other. The appellants appealed.

Held, the appeal should be allowed.

The Tribunal erred in stating that the Registrar had the onus to satisfy the Tribunal that he had reasonable grounds to believe that the registrations of the appellants should be refused/revoked. The Registrar's onus was not to show that he believed that there were such grounds, but to satisfy the Tribunal that there were, in fact, such grounds. The Tribunal also erred in holding that it was required to show deference to the Registrar's decision. The Tribunal was required to make its own decision, and had the right to substitute its opinion for that of the Registrar.

APPEAL from the decision of the Licence Appeal Tribunal.

Cases referred to Ontario (Motor Vehicle Dealers Act, Registrar) v. Shine Car Sales, 2003 11437 (ON SCDC), [2003] O.J. No. 603, 169 O.A.C. 77, 40 M.V.R. (4th) 86 (S.C.J.), apld Other cases referred to Amerato v. Ontario (Motor Vehicle Dealers Act, Registrar) (2005), 2005 31577 (ON CA), 77 O.R. (3d) 241, [2005] O.J. No. 3713 (C.A.); Brenner v. Ontario (Registrar of Motor Vehicle Dealers and Salesmen), [1983] O.J. No. 1017 (Div. Ct.); Zahariev (c.o.b. Janex) v. Registrar, Motor Vehicle Dealers Act, 2005 44815 (ON SCDC), [2005] O.J. No. 5159, 205 O.A.C. 110, 30 M.V.R. (5th) 316 (S.C.J.) Statutes referred to Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42, ss. 5, 7(1), (4)

Benjamin Salsberg, for appellants. A. Michael Rothe, for respondent. [page362]

The judgment of the court was delivered by

[1] LANE J.: -- The appellants appeal from the decision of the Licence Appeal Tribunal released March 1, 2005, directing the Registrar to carry out his Proposal of March 2, 2004 to refuse the registration of the first appellant, "First Place", and to revoke the registration of Mr. Cerullo.

[2] The order was based on two proven facts:

(1) The applicant, Dominic Cerullo, did not answer question number 5 of Section E in the application for registration for an individual under the Motor Vehicle Dealers Act, R.S.O. 1990, c. M.42 correctly.

(2) There were numerous requests for additional information made to the applicants, for which answers were not provided.

[3] The Motor Vehicle Dealers Act provides:

5(1) An applicant is entitled to registration or renewal of registration by the Registrar except where,

(b) the past conduct of the applicant affords reasonable grounds for the belief that the applicant will not carry on business in accordance with law and with integrity and honesty;

7(1) Where the Registrar proposes to refuse to grant or renew a registration or proposes to suspend or revoke a registration, the Registrar shall serve notice of the proposal . . . on the applicant or registrant;

7(4) Where an applicant or registrant requires a hearing by the Tribunal . . . the Tribunal . . . may by order direct the Registrar to carry out the Registrar's proposal or refrain from carrying it out and to take such action as the Tribunal considers the Registrar ought to take in accordance with this Act and the regulations, and for such purposes the Tribunal may substitute its opinion for that of the Registrar.

[4] In discussing the Registrar's role at the hearing before the Tribunal, the Tribunal referred to the Registrar's onus as follows:

The Registrar has the onus of proof to satisfy the Tribunal that the Registrar has reasonable grounds to believe that the registration of the applicant First Place should be refused and that the registration of the applicant Dominic Cerullo should be revoked.

[5] With respect, we are persuaded that this statement mis-states the Registrar's and the Tribunal's respective roles and is in error. To clarify, the Registrar's onus is not to show that he [page363] believes that there are such grounds. If he did not think so, he undoubtedly would not have made the proposal under review. His onus was to satisfy the Tribunal that there are such grounds.

[6] The Tribunal continues its reasons by referring to Brenner v. Ontario (Registrar of Motor Vehicle Dealers and Salesmen), [1983] O.J. No. 1017 (Div. Ct.), where this court said [at paras. 9, 10 and 12]:

The effect of s. 7(4) is that the Tribunal should only have refused to direct the Registrar to carry out his proposal if it thought the Registrar was in error in concluding that the past conduct of the applicant afforded reasonable grounds for belief that he would not carry on business in accordance with law and with integrity and honesty. The Board does not appear to have directed itself to this question and makes no finding that, in its view, the past conduct of Brenner did not afford reasonable grounds for the belief that Brenner would not carry on business in accordance with law and with integrity and honesty. Instead, the Board appears to have been preoccupied with sympathetic concern as to whether or not Brenner had genuinely reformed, and appears to have decided that it ought to give him a second chance because there was a possibility that he, indeed, might have reformed himself.

We are unable to see how the Tribunal could possibly have arrived at the conclusion that the past conduct of Brenner did not afford reasonable grounds as required under s. 5(1) (b) and, accordingly, we find that the Board erred in its decision to direct the Registrar to grant a conditional registration.

The proper question at the rehearing remains, however, whether the past conduct of the applicant affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty. Unless the Tribunal can find that it does not, the Tribunal should not order the Registrar to refrain from carrying out his proposal.

[7] The Tribunal analyzes these passages from Brenner as follows:

Therefore, it is not sufficient for the Tribunal to reach a conclusion that it would have exercised its discretion differently from the way in which the Registrar did. Clearly, in order to overrule the Registrar the Tribunal must conclude that the Registrar was wrong in his decision and that the past conduct of the applicant does not afford reasonable grounds for the Registrar's belief.

[8] Unfortunately, this analysis is based on a misreading of Brenner. The Tribunal indicates that it is to give deference to the Registrar's decision whereas actually the requirement is that the Tribunal make its own decision. One key passage in the Act is the right of the Tribunal to substitute its opinion for that of the Registrar. As this court explained in Ontario (Motor Vehicle Dealers Act, Registrar) v. Shine Car Sales, 2003 11437 (ON SCDC), [2003] O.J. No. 603, 169 O.A.C. 77 (S.C.J.):

In our view, the test in the Divisional Court case of Brenner v. Ontario (Registrar of Motor Vehicle Dealers and Salesmen), [1983] O.J. No. 1017, remains the proper test for this purpose. Brenner must be read carefully. It [page364] does not establish a rule that the Registrar must be shown to be wrong in having concluded that there was reason to doubt that the registrant would carry on business appropriately. The Tribunal approaches the matter uninhibited in any way by the Registrar's view. The test as set out in para. 12 of Brenner is as follows:

The proper question at the rehearing remains, however, whether the past conduct of the applicant affords reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty. Unless the Tribunal can find that it does not, the Tribunal should not order the Registrar to refrain from carrying out his proposal.

In our view, properly read, this Court in the subsequent case of Ontario (Registrar of Real Estate and Business Brokers) v. Faccenda, [1994] O.J. No. 954 did not import into the Brenner test a further test of error on the part of the Registrar. That case reiterated the Brenner test and did not add any element of deference to the Registrar. It should be clearly understood that the Tribunal owes no deference to the Registrar's opinion. The Registrar is the investigator. The Registrar is not a trier of fact whose opinion is based upon a hearing and so entitled to deference.

[9] In Amerato v. Ontario (Motor Vehicle Dealers Act, Registrar) (2005), 2005 31577 (ON CA), 77 O.R. (3d) 241, [2005] O.J. No. 3713 (C.A.), the Court of Appeal explained at paras. 30 and 31:

By virtue of s. 7(4), because the respondents required a hearing, the Tribunal had to schedule one. Also pursuant to s. 7(4), the Tribunal could dispose of the proceeding in one of two ways. First, it could direct the Registrar to carry out the proposal. Second, it could direct the Registrar to refrain from carrying out the proposal and "take such action as the Tribunal considers the Registrar ought to take . . . and for such purposes the Tribunal may substitute its opinion for that of the Registrar".

On the facts of this case, the Tribunal did not direct the Registrar to carry out the proposal. Therefore, the Tribunal must have been acting in accordance with the second alternative when it issued the consent order. On a plain reading of s. 7(4), the relevant portion of which is quoted in the immediately preceding paragraph, if the Tribunal chooses the second alternative, it is the Tribunal that must determine what action ought to be taken and it is the Tribunal that must direct the Registrar accordingly. It is the Tribunal's obligation to consider the evidence and make factual determinations; the Registrar is an investigator, not a trier of fact, and the Tribunal owes the Registrar's opinions no deference. See Ontario (Motor Vehicle Dealers Act, Registrar) v. Shine Car Sales, 2003 11437 (ON SCDC), [2003] O.J. No. 603, 169 O.A.C. 77 (S.C.J.), at para. 10.

[10] Thus the Court of Appeal has confirmed the analysis in Shine that the Tribunal should not have approached the Registrar's proposal as it did in this case. Rather, the Tribunal was required to make its own assessment and was free to substitute, if it were so inclined, its own opinion for that of the Registrar.

[11] It is apparent, therefore, that the Tribunal has adopted an erroneous reading of Brenner and has thereby committed an error of law. The same error was committed by the Tribunal in Zahariev (c.o.b. Janex) v. Registrar, Motor Vehicle Dealers Act, 2005 44815 (ON SCDC), [2005] O.J. No. 5159, 205 O.A.C. 110 (S.C.J.), [page365] where this court conducted an analysis of the standard of review and concluded that it was correctness. We agree and adopt that analysis and its conclusion.

[12] It was submitted that, even if we were of the view that the wrong legal test was applied, we should consider that there cannot be, on the facts of this case, any substantial miscarriage of justice in the result arrived at by the Tribunal. We decline to accept that submission. The legislature has conferred the jurisdiction to decide the facts and the suitability of the applicant and the registrant on the Tribunal and not on us.

[13] Accordingly, as the Tribunal asked itself the wrong question, its decision must be set aside and the matter be remitted to the Tribunal for a fresh hearing before another member. The applicant will have its costs. Failing agreement on the quantum, the parties may make written submissions within 30 days.

Appeal allowed.