The Ontario government will not be giving OMVIC the ability to use Administrative Monetary Penalties (AMPS) against dealers. That’s the word from officials with the Ministry of Government and Consumer Services, following our front page report in last month’s Front Line.

We have been told by the Ministry that “the proposed changes would not give any authority to OMVIC to issue AMPs”. The proposals contained in Bill 159 to establish the use of AMPs in enforcing the Consumer Protection Act (CPA), will be restricted to the Consumer Services Operations Division of the Ministry. No other regulatory bodies will be given the power to issue AMPs.

This assurance follows our Front Line story, several UCDA meetings with Ministry officials and a formal submission to the Ontario legislature’s Standing Committee on Justice Policy. The committee held public consultations and review of the proposals contained in Bill 159, a bill to amend the CPA.

While it’s welcome news for members that OMVIC will not be able to issue AMPs, this doesn’t mean that AMPs would not be used against dealers by Ministry compliance officers. Whether AMPs charges are laid by OMVIC investigators or by Ministry compliance officers, our concerns about what this could mean for members still exist.

As we wrote in the last Front Line, our concerns stem from what AMPs are and how they work. Generally, the process for laying charges under provincially administered legislation, like the CPA or the Motor Vehicle Dealers Act, begins by issuing a summons to the accused to appear in court. An AMP is more like a speeding ticket.

An accused does not automatically get their day in court. An AMP means a fine is issued and the accused is presumed guilty and expected to pay the penalty. An accused can appeal to court, but because AMP offences are considered to be “strict liability” offences, the only defence available is to deny having committed the illegal act.

It doesn’t matter whether there was any intent to commit the offence or if the accused used reasonable due diligence to avoid committing the offence. In short, the due process that is usually afforded an accused is gone.

AMPs have been used for many years to deal with offences, such as environmental spills, which can cause serious and often irreparable harm. However, their use in regulated consumer-oriented industries is quite new. The UCDA’s position on the use of AMPs against MVDA registrants is that they are not necessary, since OMVIC has multiple enforcement options when violations occur.

The details of how AMPs will work and what types of offences they may relate to, will be set out in regulations that are expected to be drafted in March. The UCDA will be participating in a comprehensive review of whatever these draft regulations might say.

The UCDA is monitoring this very closely and will engage in consultation with the Ministry about the draft regulations, to seek clarification on how, if at all, our members will be affected and to ensure that what comes out of amendments to the CPA, is fair to members.

We’re pleased and relieved to have received clarification about AMPs from the Ministry, but the UCDA will continue to be watchful, to ensure that the rights of members are not compromised.

More to come!

Extended Warranty Update

We have added another extended warranty provider to our recognized list at: https://tinyurl.com/w29crcg

Guarantee VC / GVC Premium Warranty Company
1-800-268-3284

Each of the companies listed has provided the UCDA with a copy of its insurance agreement, along with a written undertaking by the insurer to notify the UCDA in the event that the coverage is cancelled or changes are made. The UCDA asks the recognized warranty companies to have insurers provide annual updates to us, confirming that insurance remains in place.

The UCDA does not endorse any specific warranty company or product, but strongly recommends that members only offer warranties that are insured by a licensed Ontario insurer.

Who Should Receive a LightDuty Vehicle Inspection Report?

It’s already been five years since the Ministry of Transportation modernized the requirements for safety inspections. While there were early concerns about the time needed and the extra cost of more onerous inspection requirements and paperwork, the industry quickly became accustomed to the changes and it is now the new normal.

A significant change to the legislation brought in by the new standards was the requirement for the technician performing a safety inspection on a light-duty vehicle to complete an inspection report and provide it to the customer. This has always caused some confusion and we still receive inquiries from time to time about it.

The inspection report is meant to provide the “customer”, for whom the inspection is being performed, with information on the thickness of brake rotors and pads, in the case of disc brakes and the condition of brake shoe lining and drums, in the case of drum brake systems. Tire tread depth and condition is also required to be recorded on the report. As well, “tell tales” (warning light indicators) also need to be made note of by the inspector on the report.

The confusion about the report stems from the requirement to provide the completed form to the “customer”. Dealers, of course, think of their customer as any client purchasing or leasing a vehicle from the dealer. If the dealer has its own service department, clients for whom service is performed are also the dealer’s customers. So when a dealer does a safety on a vehicle as part of the sale, the report should be given to the dealer’s customer who is
purchasing the vehicle.

But, if a dealer sends its vehicles out to a third party service centre to perform repairs and service work, the dealer is the customer, as far as the service facility is concerned. Same for a garage which is a licensed Motor Vehicle Inspection Station (MVIS). If a dealer sends its inventory to an MVIS facility for safety certification, the station likely doesn’t know, or care, who the dealer’s customer is. As far as the station is concerned, the dealer is the customer. So the station will provide the inspection report to the dealer.

In this case, does the dealer need to pass the report on to its customer who is buying the vehicle?

Well, that’s a good question. The legal answer is “No, they do not need to”.

The rules about safety inspections, including the need to supply a customer with an inspection report, apply to MVIS stations. Unless the selling dealer is the MVIS station that issued the safety, the rule does not apply to the dealer.

Having said that, should a dealer supply a copy of the report received from an outside station to its customer when selling the vehicle? That’s entirely up to the individual dealer, but being fully transparent will likely go a long way towards earning the customer’s confidence and trust about the vehicle’s condition.

Curbsider New Year

A new decade begins with new convictions.

OMVIC got the New Year started with Ontario courts accepting some hefty curbsider guilty pleas; all on January 17th, 2020.

In Paris, Ontario, Robert Mcglogan a.k.a. “Kelly” pleaded guilty to one count of curbsiding under the Motor Vehicle Dealers Act, 2002 and was given a fine of $5,000.

In Kitchener, Robert Klein pleaded to one count of curbsiding and received a fine of $2,500.

Finally, in Cambridge, a company called Motorhead Classic Cars Ltd. o/a Motorhead Classics, made more noise than the old metal-rock band of the same name, when they pleaded guilty to one count of curbsiding and were handed a fine of $10,000!

Competition Bureau Priorities for 2020 and Beyond

Everyone likes to make ‘to do’ lists when a new year dawns, especially when a new decade dawns. When the Deputy Commissioner of the Deceptive Marketing Practices Directorate at the Canadian Competition Bureau shares her list, it’s hard not to take notice.

In recent remarks, Deputy Commissioner Josephine Palumbo identified four enforcement priorities for her office going forward into 2020:

(a) influencer marketing;
(b) false online consumer reviews;
(c) dishonest information about data privacy; and
(d) dishonest price claims.

For our members, in this digital age of online marketing, probably the two that could most affect members are false online consumer reviews and dishonest price claims.

These two issues speak for themselves, so we don’t need to go into a whole lot of legal mumbo jumbo for dealers to understand. First, it is not a super idea to post fake reviews
to try and make your dealership (or your products) look better in rankings on Google, Yelp, car listing sites and so on. Second, dishonest price claims are a very bad idea.

1. Astroturfing – This is the posting of reviews that speak highly of your dealership, but which are actually posted by your employees or friends of the dealership, not by “real” customers. Creating a falsely positive image of your business is not just silly, it can cost you big bucks. In 2015, this kind of practice cost Bell Canada over one million dollars in fines to resolve the Bureau’s concerns.
2. Dishonest price claims – Ads that suggest your vehicles are somehow magically lower priced than your competition are risky. Why? Because the Bureau might come calling and expect you to actually be prepared to prove that! As reported in earlier Front Lines, this kind of deceptive pricing cost the Hudson’s Bay Company over $4.5 million in penalties and costs.

As Ms. Palumbo said in her remarks on January 22:

“It is also important for advertisers operating within this fast-paced economy to know and adhere to the rules of fair competition, as set out by the Competition Act.

Because strong, vigorous competition benefits Canadians.

It means better choices, better prices and fairer business practices, and it means a stronger economy where everyone can prosper and thrive.”

The Luxury of Time

The Federal Government plans to introduce a 10% luxury goods sales tax (excise tax) on purchases of personal automobiles, boats, and aircraft valued at $100,000 or more (indexed to inflation). Commercial use of automobiles, boats and aircraft will likely be exempt.

As we have not yet seen the 2020 budget, we don’t know many details, such as when it will be implemented, how it will affect sales already made, and whether it will also apply to leases.

What we do know is that the Liberal Government is a minority government and this proposal likely faces some pretty stiff opposition, so stay tuned.

Defamation

Members know the power of social media, both good and bad. While often on the receiving end of negative consequences, businesses are not the only ones who can find this medium cuts both ways.

A woman has learned the hard way that you can’t say anything you want about a business in an email.

A disgruntled woman whose parents had sued a furniture store over a dining room table and won a small award in small claims court, sent emails to family, friends and colleagues calling the company “untrustworthy” and “deceitful”.

The company considered the emails to be defamatory and sued her. It WON!

Because the woman showed malice (she admitted her motivation was “revenge”), refused to apologize and encouraged others to republish the email, the court awarded the company $15,000 in damages and $25,000 in court costs!

https://tinyurl.com/yx3e23rs

In another, more recent, case a disgruntled bride was so dissatisfied with her wedding planner that she mounted an online campaign. The wedding planner was convinced that this drove its customers away, and effectively put her out of business.

She sued the bride and WON $115,000 in damages!

The judge said: “This case is an example of the dangers of using the internet to publish information without proper regard for its accuracy.”

https://tinyurl.com/tawucys

Every case is unique and Members shouldn’t expect to be able to sue over any negative comment made by an unhappy customer. However, these cases show that, in the right circumstances, a business can successfully take action for unjustified defamatory comments that may damage its reputation.

No, this has nothing to do with your electricity bill!

Way back in the Fall of 2013, Ontario’s then Liberal government made a lot of noise about bringing in something called Administrative Monetary Penalties (AMPs) as a means of fining businesses, including motor vehicle dealers, for violating various laws.

Back then, the UCDA filed a submission with the Ministry of Consumer Services expressing our serious concerns about the proposal. So did other business organizations.

The government backed away and the proposal did not go anywhere …. or so we thought.

Now, more than six years later, the Conservative government is resurrecting the AMP idea as part of Bill 159, introducing amendments to the Consumer Protection Act (CPA).

The government is proposing to add AMPs as a tool that could be used, not only by the government, but also by regulators, including OMVIC, as an option to enforce compliance with the law.

We are once again concerned for our Members.

Why?

Well, we are concerned because of what an AMP is. Unlike laying a charge for violating the Motor Vehicle Dealers Act, or CPA, and issuing a summons to the accused dealer to appear in court, an AMP is a conviction on the spot.

Even if you appeal an AMP and get your day in court, you are denied the defence of due diligence available to most accused. You are issued the fine, presumed guilty and you are expected to pay it. The usual due process is gone.

The 2013 proposal was very specific about what kind of charges an AMP could be used for and how much an AMP fine could be (up to $20,000). The current proposal is very vague and difficult to get a handle on at this early stage, with the details to be left to regulations that would be brought in later.

We do know AMP fines could be as high as $50,000!

We don’t know who would keep the money from an AMP fine (the government or OMVIC).

We don’t know what type of offences the government would allow AMPs to be used for.

We don’t want to wait around to find out, so the UCDA has made a written submission to the Standing Committee on Justice Policy, which is reviewing Bill 159, expressing our concerns and asking, at least, for restrictions on how AMPs could be used and in what circumstances they could be used.

OMVIC currently has more than enough tools in its arsenal to deal with contraventions by both dealer and salesperson registrants.

OMVIC can lay charges against registrants in Provincial Offences Court.

Through a Notice of Complaint, OMVIC can initiate a Discipline Hearing, with penalties as high as $25,000.

In appropriate situations, OMVIC can Propose to Revoke a dealer’s or salesperson’s licence.

Does OMVIC really need more power to do its job?

We’ll keep you posted.

Extended Warranty Update

We have added additional warranty providers to our list, which we updated in our last newsletter. They have satisfied the UCDA that their warranties are fully insured by a licensed Ontario insurer:

Assurant Vehicle Protection Services 1-800-387-0119 (formerly Coast to Coast)
People’s Choice Warranty Ltd. 1-888-284-2356

Each of the companies listed below have provided the UCDA with a copy of its insurance agreement, along with a written undertaking by the insurer to notify the UCDA in the event that the coverage is cancelled or changes are made. The UCDA asks the recognized warranty companies to have insurers provide annual updates to us, confirming that insurance remains in place.

Verified Insured Warranty Companies

After receiving updates from insurers, here is the current alphabetical list of warranty companies that have met our requirements for insurance recognition:

The UCDA does not endorse any specific warranty company or product, but strongly recommends that members only offer warranties that are insured by a licensed Ontario insurer.

Out-of-Province Buyers And Tax

As surprising as this might sound, despite the fact these tax rules have been in place for years now, dealers keep getting tripped up on sales to out of province buyers. Even large financial organizations, who fund a lot of these deals, don’t seem to have a standard protocol to make it easy for dealers and consumers.

Suppose you have a buyer from Quebec. In most cases, Ontario dealers are not registered with the Quebec Government to collect Quebec tax (some Members close to the border who do a lot of business with Quebec buyers are registered to collect and remit Quebec Sales Tax [QST]).

That means the consumer will have to pay the QST, which is 9.975%, at the Quebec licence office when they register the vehicle. Don’t forget that part. We get calls from consumers who were not told that and they are very upset when they get home to find out!

So what does the Ontario dealer actually have to collect and remit to the Federal Government (because all dealers are required to collect Federal tax)? The answer is simple.

If the vehicle is delivered in Ontario, charge 13% (HST). If the dealer ships the vehicle to the buyer in Quebec, charge 5% (GST). A Quebec consumer who takes delivery in Ontario, pays 13% and drives back home, can apply for a rebate from the Federal Government to get the 8% Ontario portion of the 13% HST back, so long as they have proof of the tax they have paid.

But, we still see deals where a dealer sells a vehicle to a consumer who takes delivery in Ontario and charges 5% federal tax and 9.975% QST on the bill of sale, messing things up considerably.

The dealer has not collected enough Federal tax. They have no way of sending the QST to the Quebec government, their paperwork is all wrong and the purchaser will be asked for the QST when registering the vehicle in Quebec. As we say, a mess.

We spoke with one lender about their process and as you might expect, they leave this pretty much up to the dealer. The dealer requests the loan advancement, including the tax that they determine needs to be collected to get the deal done. If the dealer chooses to send the customer with a cheque including the QST, that is entirely up to them.

All advancements are made to the dealer, so it is only through the dealer that the customer will get the money they need to pay the QST on a financed deal, or it will have to come out of the customer’s own pocket. Dealer’s need to keep this in mind and make sure the buyer understands, as well.

Of course, dealers get buyers from all Provinces and different issues arise depending on the tax regime in any given Province.

For a summary of all these rules and GST and HST rates in all Canadian jurisdictions, please visit our website at:

https://tinyurl.com/r8d4drz

The Resignation Boomerang

Our legal department recently received an interesting call from a Member. Apparently, one of the Member’s employees, a service technician, exercised a fantasy many of us have had at least once in our working lives and told the boss to ‘take this job and shove it, I ain’t workin’ here no more …’.

Unlike in the old Johnny Paycheck song, however, the fellow was back the next day. Having cooled off, he decided the place wasn’t so bad after all and he changed his mind about quitting.

Trouble was, the Member kind of liked his first answer!

As we’ve mentioned in Front Line before, employment law is littered with all kinds of land mines for unsuspecting employers. We urge any Member confronted with these sticky questions to consult the experts, a lawyer specializing in employment law preferably, as our legal folks here are no experts in this area. Like criminal law, it is a delicate area in which to give advice.

Having said that, there are some interesting takeaways from past court decisions.

The decision to leave one’s job is a big deal. Courts will expect the intention to be crystal clear, so no one can doubt the person really meant to quit. Employers should try to get such a decision from the employee in writing; a temper tantrum and storming out may not be enough.

Even in a simple case, the decision can be pulled back by the employee unless and until the employer has made its intention to accept the resignation crystal clear. It should be in writing, such as a confirmation letter, email or text. Further evidence would include the hiring of a replacement.

Consider this Court of Appeal case, Kerr v. Valley Volkswagen, 2015 NSCA 7 (CanLII) in Nova Scotia. Mr. Kerr worked as a parts manager at the dealership and told his supervisor that he wanted a raise or he would quit, because he had another dealer who would pay him what he wanted.

Mr. Kerr was told if his performance improved in three weeks, he could earn the raise. His performance did not improve and his ultimatum was not withdrawn. After the three weeks, the dealer formally accepted his resignation. Mr. Kerr tried to revoke his ultimatum at that point, but it was too late.

The court found that a reasonable person would agree that Mr. Kerr had intended to quit.

We can’t think of anyone more reasonable than a UCDA Member!

Over 250 Charges Laid Following Investigation

The following comes from globalnews.ca.

Police have laid more than 250 charges following an eightweek investigation into tow truck companies.

Durham Regional Police launched Project Bondar, which focused on several tow truck companies in the Greater Toronto Area. It was all sparked after a series of complaints from drivers following an accident.

“They were told they had to pay a very high fee in order to get their vehicles back,” says Const. George Tudos with Durham Regional Police.

That fee sometimes reached thousands of dollars, according to a Global News investigation. Tudos says the issue was the car was being held for ransom as well.

“A lot of times the companies would not return them unless those monies were paid,” Tudos explained.

Global News spoke to a customer whose car was being held for more than $4,000. It was later released after our investigation.

Through Project Bondar, more than 30 vehicles have been recovered — including two luxury cars, a Ferrari 488 and a BMW M4, among a number of vehicles police believe may have been stolen.

“Both of these vehicles were in the process of being taken apart,” Tudos said.

“We had eight tow trucks, two of which were engulfed in flames.”

The team executed warrants in Brampton, Scarborough, Etobicoke, Ajax, Clarington, Pickering and Whitby. As a result, a range of charges were laid.

“There were a lot of contraventions against the Highway Traffic Act and Consumer Protection Act,” Tudos said.

Police say they also met with tow truck drivers to educate them on best practices as well. Investigators say they also want drivers to be mindful of who they allow to tow their car.

“Make sure you’re aware of what your insurance company covers,” Tudos said.

“Make sure the tow company removing your vehicle is a legitimate one.”

This comes just weeks after Toronto police investigated a number of tow truck fires in Toronto and York Region. Three vehicles were set ablaze within 30 minutes of each other, and police believe accelerant was used in two of those cases.

It appeared that tow truck drivers were competing for business, according to Mark Graves with the Provincial Towing Association of Ontario.

Graves told Global News in December it appears there was “a significant amount of escalation” recently, adding several companies seem to be challenging each other for work.

It’s not clear if Project Bondar is connected with this, but Const. Tudos says they are working with other police agencies.

If you have any information that could help, contact Durham Regional Police or Crimestoppers.