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MVDA - General (2). Registrar, Motor Vehicle Dealers Act v. 2631273 Ontario Inc. [registrant misconduct]
In Registrar, Motor Vehicle Dealers Act v. 2631273 Ontario Inc. (Ont Div Ct, 2026) the Ontario Divisional Court allowed an MVDA Registrar's appeal, here brought against a decision "in which the LAT decided not to revoke the registration of the Respondents under the Motor Vehicle Dealers Act, 2002".
Here the court considered aspects of the MVDA regime, and - more specifically - misconduct in the form of "failure to supervise their employees and oversee their business" by the salesperson registrants:[2] On the facts as found, the LAT erred in principle in failing to ascribe appropriate regulatory responsibility to the Respondents for the repeated misconduct of their corporation for which they were responsible. The LAT further erred by failing to consider and make findings about the overall context in which the Respondents’ misconduct took place, with a view to determining the Respondents’ degree of culpability. The business was rife with misconduct of the very type which grounds the Appellant’s concerns. The individual Respondents were responsible for that misconduct, and their failure to supervise their employees and oversee their business to such an extent as to allow the misconduct to flourish, as it did, would justify the revocation proposed by the Registrar. Only if the Respondents could establish contextual circumstances that explained and gave a basis to excuse their default would a remedy short of revocation be appropriate: the LAT failed to direct itself to these contextual factors, failed to make relevant findings about those factors, and as a result this court does not have the requisite factual findings available to decide remedy. Therefore, for the reasons that follow, I would allow the appeal and remit the issue of remedy back to the LAT for a fresh hearing before a different Adjudicator.
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Regulatory Regime
[5] Section 4(1)(b) of the MVDA requires every motor vehicle salesperson in Ontario to be registered under the Act.
[6] Under ss. 8 and 9 of the MVDA, the Registrar may issue a notice of proposal (“NOP”) to refuse, suspend or revoke a registration if, in the Registrar’s opinion, an applicant is not entitled to registration. Under MVDA, s. 6(1)(a)(ii), a person is not entitled to registration if their past conduct affords “reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty.” Section 6(1)(d)(iii) of the MDVA imposes the same restriction on corporations respecting the conduct of their officers or directors.
[7] Those subject to an NOP may request a hearing before the LAT (MDVA, s. 9(5)). Following a hearing, the LAT may direct the Registrar to carry out its proposed action or substitute its opinion for that of the Registrar. The LAT may also attach conditions to its order or to a registration.
Background
[8] The Respondents, Charles Cadman and Robert (Bobby) Wilkinson, are motor vehicle salesman and former principals of a car dealership, 2631273 Ontario Inc. (“2nd Chance”). 2nd Chance, though a named respondent, did not appear and did not contest the revocation remedy imposed upon it.
[9] On July 6, 2023 and March 3, 2024, the Registrar issued notices under s. 9 of the MVDA stating its intention to revoke the Respondents’ registration as motor vehicle salespersons pursuant to ss. 6(1)(a)(ii) and 6(1)(d)(iii) of the MVDA. The Registrar sought revocation on the grounds that the past conduct of the Respondents, in their capacity as officers and managers of 2nd Chance, afforded reasonable grounds to believe that they would not carry on business in accordance with the law and with integrity and honesty. The Respondents appealed the NOP to the LAT pursuant to s. 9(5) of the MVDA.
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[23] The Registrar raises the following issues on appeal:(1) Did the LAT err by imposing conditions that do not protect the public interest? ....
[24] I would give effect to the Registrar’s first argument. The Respondents’ business was rife with dishonesty. While the Respondents did not participate in or condone the repeated dishonest conduct of their employees, neither did they manage their business to detect and prevent dishonesty. The LAT was required to consider the context in which the Respondents’ misconduct took place, including the size of the business, the nature and frequency of employee dishonesty, the roles of the Respondents in the business, the extent to which the Respondents established that they reasonably discharged their responsibilities, and any other contextual factors that bore on assessing the culpability of the Respondents for the management failures that took place. ....
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[39] The MVDA is consumer protection legislation. When a registrant is found to have committed regulatory misconduct, the paramount principle in determining remedy is protection of the public.
[40] Misconduct need not always involve dishonesty. But when it does, the usual remedy is revocation. Minor, isolated defalcation may not lead to revocation. Where a business is victimized by a “rogue employee” it may be that only that employee’s registration is revoked. Where, as here, the business is ‘rife with rogues’, and a large menu of dishonest conduct takes place, the balance shifts.
[41] As stated by this court in Prestige Toys Ltd. v. Registrar, Motor Vehicles Act, 2009 CanLII 43657, para. 39 (per Karakatsanis J., as she then was):There is no presumption that corporate wrongdoing is automatically attributable to the individual officer and director. The officer and director’s conduct is a matter of evidence. However, Lioubimova’s conduct as an officer and director should be assessed in the context of the operational circumstances, the conduct of the corporation, and her legal responsibilities as an officer and director. [42] Failure to supervise an employee resulting in misconduct reflects both on the corporate dealership and the supervisor personally: Allright Automotive Repair Inc. v. Ontario (Motor Vehicle Dealers Act, Registrar), [2008] OJ No. 1557 (Div. Ct.) at paras. 6-9.
[43] The LAT found that the Respondents did not commit the dishonest acts themselves. This finding was available on the evidence. However, the LAT failed to assess the “operational circumstances, the conduct of the corporation, and [the Respondents’] responsibilities as officers and directors.” This was a necessary analysis before the LAT could conclude that the Respondents’ registration should not be revoked.
[44] The operational circumstances included the fact that the Respondents were the two controlling minds of the corporation and were active in the business. They were responsible personally for overseeing their employees. The misconduct, as found by the LAT, involved four employees, multiple distinct incidents of misconduct, and a laundry list of misconduct, as listed above. In the absence of compelling evidence that the Respondents had exercised reasonable diligence in the discharge of the managerial responsibilities, these circumstances would warrant revocation.
Argument (6): Remedy
[45] The Registrar urges this court to impose an appropriate regulatory remedy. I would not do that in the circumstances of this case. While there are compelling reasons to believe that revocation is the only appropriate remedy, the Respondents are entitled to have their arguments to the contrary assessed at first instance, applying the proper principles.
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