Court File and Parties

CITATION: Toronto Quality Motors v. Registrar, Motor Vehicle Dealers Act, 2022 ONSC 645

DIVISIONAL COURT FILE NO.: 135/21

DATE: 20220131

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: TORONTO QUALITY MOTORs inc., 2291683 ontrio inc. o/a auto DEALER and khaled mousa-khaled, Appellants

AND:

REGISTRAR, MOTOR VEHICLE DEALERS ACT, 2002, Respondent

BEFORE: Dambrot, Swinton, and Copeland JJ.

COUNSEL: Ms Laney Paddock, counsel for the Appellants

Ms Diana V. Mojica, counsel for the Respondent

HEARD at Toronto (by videoconference): January 27, 2022

ENDORSEMENT

[1] This is an appeal from a decision of the Licence Appeal Tribunal, dated February 6, 2021, that directed the Registrar to carry out a proposal to revoke the appellants’ registrations, pursuant to s. 9(5) of the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B. At the end of the hearing, the appeal was dismissed with reasons to follow. These are the reasons for decision.

[2] Pursuant to ss. 6(1)(a) and 8(1) of the MVDA, the Registrar may revoke, suspend, or attach conditions to an individual’s registration where the registrant’s past conduct affords reasonable grounds for belief that the registrant will not carry on business in accordance with the law and with integrity and honesty, or where the registrant provides a false statement in an application for registration or for renewal of registration. Pursuant to ss. 6(1)(d) and 8(1), the registration of a corporate registrant may be revoked, suspended, or placed under conditions on the same basis in respect of the conduct of its directors or officers.

[3] The tribunal found that there were reasonable grounds to believe that the appellants would not carry on business in accordance with the law and with integrity and honesty, and that on one occasion, Mr. Moussa-Khaled knowingly provided a false statement in a registration renewal application, both contrary to s. 6 of the MVDA.

[4] The appellants appeal liability and the sanction of revocation.

[5] Section 11(1) of the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sch. G, provides that an appeal lies from a decision of the tribunal under the MVDA to the Divisional Court.

[6] As a statutory appeal, the standard of review on questions of law is correctness. On questions of fact and mixed fact and law, the standard of review is palpable and overriding error, unless there is an extricable question of law: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at para. 37.

[7] The issues raised in this appeal involve the tribunal’s application of s. 6 of the MVDA to the facts as found by the tribunal. The application of the law to the facts is a question of mixed fact and law. There is no extricable question of law in this appeal. Accordingly, the standard of review on this appeal is palpable and overriding error.

[8] There were two issues before the tribunal with respect to liability:

(i) Whether the appellants’ past conduct afforded reasonable grounds to believe that they would not carry on business in accordance with the law and with integrity and honesty; and

(ii) Whether the appellants knowingly provided false statements in a registration renewal application.

[9] The tribunal provided lengthy and detailed reasons that reviewed the evidence, and explained clearly the findings of fact and the reasons for those findings. The findings of fact included that the appellants committed misconduct in seven consumer transactions by engaging in conduct that was contrary to Ontario Regulation 333/08, which is designed to protect consumers; that the appellants had been convicted of provincial offences on two occasions relevant to whether they would conduct business with integrity and honesty; and that the appellants had on one occasion in 2019 provided false information in a registration renewal application.

[10] Of particular importance were factual findings made by the tribunal regarding the consumer transactions. The findings made by the tribunal included repeated instances of the appellants:

• falsifying bills of sale by adding accident damage disclosure to bills of sale after customers had signed them;

• failing to disclose accident damage to vehicles to customers;

• failing to return deposits to customers upon request where a bill of sale had not yet been signed; and

• failing to provide customers with a copy of the bill of sale upon signing.

[11] The tribunal found as a fact that the consumer transactions demonstrated a pattern of dishonesty towards consumers and showed a willingness to manipulate unsophisticated and inexperienced customers.

[12] There was ample support in the record for the findings of fact of the tribunal. Further, the findings of fact provided ample support for the tribunal’s conclusion that there were reasonable grounds to believe that the appellants would not carry on business in accordance with the law and with integrity and honesty, and that in 2019, Mr. Moussa-Khaled knowingly provided a false statement in a registration renewal application.

[13] The appellants submit that the tribunal erred in its application of the test under s. 6 of the MVDA by failing to consider the appellants’ past history of compliance in their business operations, and that the conduct at issue was a “small subset” of the overall business, based on the number of cars they sell per month.

[14] We disagree. The tribunal was clearly aware of the appellants’ business history and the volume of vehicles they sold per month (see, for example, para. 10 of the reasons of the tribunal). The tribunal took into account the appellants’ history, but nevertheless concluded, based on its findings of fact about the seven consumer transactions, the 2013 and 2018 Provincial Offences Act convictions, and the false statement in the 2019 registration renewal application, that there were reasonable grounds to believe that the appellants would not carry on business in accordance with the law and with integrity and honesty. We are not, on appeal, permitted to re-assess or re-weigh that evidence.

[15] The appellants further submit in their written argument that the tribunal erred in finding that Mr. Mousa-Khaled did not provide an explanation for the false statement in the 2019 renewal application.

[16] We disagree. The reasons of the tribunal in relation to the false statement in the 2019 renewal application must be read in the context of the tribunal’s findings about all four of the alleged false statements in renewal applications, three of which the tribunal was prepared to accept may have been inadvertent (at paras. 206-211 of the reasons of the tribunal).

[17] The first three allegations of false statements in renewal applications all related to allegations of failing to disclose assault charges laid against Mr. Mousa-Khaled in July 2011. Those charges were ultimately withdrawn, and Mr. Mousa-Khaled entered into a peace bond in October 2012. The tribunal’s findings for the first three alleged false statements were based on the evidence of Mr. Mousa-Khaled that he did not realize that outstanding charges, as opposed to convictions, were covered by the questions, and that he did not realize that the peace bond was a court order. The tribunal’s decision makes clear that the reason the tribunal found that the knowledge requirement for the first three false statements was not proven was because it accepted that Mr. Mousa-Khaled may have misunderstood what the questions covered.

[18] By contrast, the false representation in the 2019 renewal application for Toronto Quality Motors related to a false answer about a conviction – not a pending charge or a peace bond. Mr. Mousa-Khaled answered “no” to that question, despite the fact that Toronto Quality Motors had been found guilty in October 2018 of five offences under the Highway Traffic Act in relation to vehicle safety inspections. The tribunal found that because Toronto Quality Motors had been found guilty of the provincial offences, there was no room for Mr. Mousa-Khaled to reasonably be confused about whether he was required to disclose them in the renewal application. We find no error in this finding of fact by the tribunal.

[19] For these reasons, we conclude that the appellants have not shown any palpable and overriding error in the tribunal’s findings that the appellants did not meet the standard required by s. 6 of the MVDA.

[20] With respect to the appeal from the disposition, it is well-established that in order to overturn a penalty or disposition imposed by a regulatory tribunal, an appellant must show that the decision-maker made an error in principle or that the penalty or disposition was “clearly unfit”: Mitelman v. College of Veterinarians of Ontario, 2020 ONSC 3039 (Div. Ct.) at para. 18.

[21] In the criminal law context, case law in relation to a similar appellate standard of review describes the threshold for appellate intervention as a requirement to show that a sentence is: “demonstrably unfit”, “clearly unreasonable”, “clearly or manifestly excessive”, “clearly excessive or inadequate”, or representing a “substantial and marked departure” from penalties in similar cases. This high threshold also applies in the administrative law context. To be clearly unfit, a penalty or disposition must be disproportionate or fall outside the range of penalties for similar offences in similar circumstances. A fit penalty is guided by an assessment of the facts of the particular case and the penalties imposed in other cases involving similar infractions and circumstances: College of Physicians and Surgeons v. Peirovy, 2018 ONCA 420 at paras. 56-57.

[22] The appellants submit that revocation was clearly unfit in light of the appellants’ history of compliant behaviour in their business operations. The appellants submit that the tribunal did not sufficiently consider whether a disposition less severe than revocation would be adequate in the circumstances.

[23] We disagree. The tribunal expressly considered and rejected a disposition imposing conditions on the appellants’ registrations or a period of suspension. The tribunal was aware of the appellants’ history, how many vehicles they sold per month, and that they had not been previously subject to conditions on their registration. The tribunal explained its reasons for finding that imposing conditions or a suspension were inadequate protections for the public in the circumstances of this case. In particular, the tribunal rejected lesser dispositions because it found that the infractions at issue in this case involved a pattern of dishonest conduct by the appellants, which involved the manipulation of unsophisticated and inexperienced customers. The tribunal found that this pattern of dishonest conduct “undermined regulatory requirements that are fundamental to the protections that the legislation affords to consumers”. The appellants seek now to portray the misconduct at issue as isolated incidents. But that is contrary to the factual findings by the tribunal. The tribunal found that revocation was warranted in order to protect the public and to promote public and industry confidence in the used motor vehicle sales industry.

[24] The appellants submit that revocation was disproportionate when compared to another case that the appellants submit is similar, Premium Cars Wholesale Limited et al. v. Registrar, Motor Vehicle Dealers Act, 2020 27360 (ON LAT). In Premium Cars a suspension was imposed.

[25] The high threshold for appellate intervention on penalty or disposition reflects that crafting an appropriate disposition is a very fact-dependent exercise. However, whether similar dispositions have been imposed in similar cases is one aspect of considering whether a disposition is “clearly unfit”. We agree with the respondent that the Premium Cars case is distinguishable from this case. In Premium Cars among the factors that led the tribunal to conclude that a suspension was appropriate was that in a number of cases where written disclosure of vehicle history was not provided, the tribunal found as a fact that customers were aware of the relevant vehicle history and were not misled: Premium Cars at paras. 280, 295. That is different than the finding in this case, where the tribunal found that the appellants engaged in a pattern of dishonest conduct towards consumers that involved manipulating unsophisticated and inexperienced customers, and undermined regulatory requirements fundamental to the protection of consumers. This court has upheld revocation as within the range of reasonable dispositions for conduct involving a pattern of dishonest transactions with consumers: 1855456 Ontario Inc. v. Registrar, Motor Vehicle Dealers Act, 2021 ONSC 2905 at paras. 12-14.

[26] For these reasons, we conclude that the tribunal made no error in principle with respect to the disposition, and that revocation was not clearly unfit in the circumstances of this case.

[27] The appeal is dismissed, with costs payable to the respondent in the amount of $2,500 all inclusive.

Dambrot J.

Swinton J.

Copeland J.

Date: January 31, 2022