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Motor Vehicle Dealing (Ontario) Legal Guide
(20 June 2021)

Ch.5 - The Code of Ethics

  1. Overview
  2. The Code of Ethics
  3. Vehicle History/Disclosure When Customer is Another Dealer
  4. Where Trade-In and Undertaking re Loan or Costs
  5. Disciplinary Procedures
    (a) General
    (b) Limitation
    (c) Procedures
    (d) Orders
    (e) Parties and Service of the Decision
  6. Appeals
    (a) General
    (b) Appeal Procedures



1. Overview

The MVDA sets up a 'Code of Ethics' [the 'Code'] [Code Reg 332/08] which is enforced by a discipline and appeals committee [MVDA s.17(1-3), Code Reg 10-12]. The Code "applies to registrants despite any contract or waiver to the contrary" [Code Reg 2].


2. The Code of Ethics

The Code of Ethics contains a wide range of standards and duties:
  • Financial Responsibility

    A registrant shall be financially responsible in carrying on business [Code Reg 3(1)].

  • No Representation that Charge Officially-Approved

    A registrant shall not indicate to any person, directly or indirectly, that any payment, commission or other remuneration in connection with a trade in a motor vehicle is fixed or approved by the administrative authority, if any, a government authority or any motor vehicle board or association [Code Reg 3(2)].

  • Clear and Truthful Representations

    A registrant shall be clear and truthful in describing the features, benefits and prices connected with the motor vehicles in which the registrant trades and in explaining the products, services, programs and prices connected with those vehicles [Code Reg 4(1)].

  • Ethical Representations

    A registrant shall ensure that all representations, including advertising, made by or on behalf of the registrant in connection with trading in motor vehicles, are legal, decent, ethical and truthful [Code Reg 4(2)].

  • Explanation of Terms

    Before entering into a contract with a customer who is not a dealer in respect of a trade in a motor vehicle, a dealer shall explain to the customer the terms of the contract between them, including the financial and other obligations, if any, of the customer under the contract [Code Reg 4(3)].

  • Dealer to Ensure Salesperson Compliance

    A dealer shall ensure that every registered salesperson that the dealer employs or retains to act as a salesperson carries out his or her duties in compliance with this Regulation [Code Reg 6(1)].

  • Salesperson Not to Precipitate Dealer Contravention

    A registered salesperson shall not do or omit to do anything that causes the dealer who employs or retains the salesperson to contravene this Regulation or any applicable law with respect to trading in motor vehicles [Code Reg 6(2)].

  • Document Compliance

    A registrant shall ensure that all documents used by the registrant in the course of a trade in a motor vehicle are current and comply with the law [Code Reg 7(1)].

  • Dealer to Facilitate Customer's HTA Obligations on a Sale, Unless Directed Otherwise

    There is a duty on a new owner of a motor vehicle "for which a permit has been issued, (to) apply to the Ministry, on the form provided therefor, for a new permit for the vehicle" [HTA 11(2)]. A dealer who sells a customer a motor vehicle shall facilitate compliance by the person with these obligations, unless the person instructs the dealer not to do so [Code Reg 7(2)].

  • Respect and Ethical Standards

    In carrying on business, registrants shall not engage in any act or omission that, having regard to all of the circumstances, would reasonably be regarded as insulting to human dignity or integrity and shall not use symbols that, having regard to all of the circumstances, would reasonably be regarded as offensive [Code Reg 8(1)].

  • Business Ethics

    Registrants shall carry on business ethically and with respect for the rights and interests of the persons with whom they do business [Code Reg 8(2)].

  • Professional Standards

    In carrying on business, a registrant shall not engage in any act or omission that, having regard to all of the circumstances, would reasonably be regarded as disgraceful, dishonourable, unprofessional or unbecoming of a registrant [Code Reg 9(1)].

  • Honesty

    In carrying on a business, a registrant shall act with honesty, integrity and fairness [Code Reg 9(2)].

  • Best Efforts to Avoid Fraud and More

    A registrant shall use the registrant’s best efforts to prevent error, misrepresentation, fraud or any unethical practice in respect of a trade in a motor vehicle [Code Reg 9(3)].

  • Conscientious Service and Competence

    A registrant shall provide conscientious service to the registrant’s customers in the course of a trade in a motor vehicle and shall demonstrate reasonable knowledge, skill, judgment and competence in providing the services [Code Reg 9(4)].

3. Vehicle History/Disclosure When Customer is Another Dealer

At Ch.4 ["Types of Contracts and Disclosure"], the MVDA sets out extensive contractual disclosure requirements for customers (consumer and commercial). Here in these Code provisions we now see a similar arrangement for when a dealer sells or leases to another dealer [Code Reg 5]:
  • If Used, Distance

    1. If the vehicle is a used motor vehicle, the total distance that it has been driven if the dealer can determine the distance.

  • If Used, and Partial Distance Unknown to Dealer

    If the motor vehicle is a used and the dealer cannot determine the total distance that it has been driven, but can determine the distance that it has been driven as of some past date, a statement of that distance and date, together with a statement that the total distance that the vehicle has been driven is believed to be higher than that distance.

  • If Used, when Total Distance Unknown to Dealer and Caution

    If the motor vehicle is a used motor vehicle and the registered motor vehicle dealer can determine neither the total distance that the vehicle has been driven, nor the distance that the vehicle has been driven as of some past date, a statement that the total distance that the vehicle has been driven is unknown and may be substantially higher than the reading shown on the odometer.

  • Odometer Concern Stated

    If the vehicle’s odometer is broken or faulty, has been replaced, has been rolled back or is in miles, a statement to that effect.

  • Past Heavy Use History

    If any of the following is true of the vehicle, a statement to the effect that the vehicle was previously,
    i. leased on a daily basis, unless the vehicle was subsequently owned by a person who was not registered as a motor vehicle dealer under the Motor Vehicle Dealers Act or the Motor Vehicle Dealers Act, 2002,

    ii. used as a police cruiser or used to provide emergency services, or

    iii. used as a taxi or limousine.
  • Fire Damage

    If the vehicle has sustained any damage caused by fire, a statement to that effect.

  • Liquid Damage

    If the vehicle has sustained any damage caused by immersion in liquid that has penetrated to the level of at least the interior floorboards, a statement to that effect.

  • Structural Damage or Repairs

    If there has been structural damage to the vehicle or any repairs, replacements or alterations to the structure of the vehicle, a statement to that effect.

  • Anti-Locking System Inoperative

    If the vehicle is equipped with an anti-lock braking system that is not operational, a statement to that effect.

  • Airbags Inoperative

    If any of the vehicle’s airbags are missing or are not operational, a statement to that effect.

  • Material Different from Production

    If the vehicle is materially different from the original or advertised production specifications, a statement to that effect.

  • Panels

    If the vehicle has two or more adjacent panels that are not bumper panels and that have been replaced, a statement to that effect.

  • Trim Level

    The make, model, trim level and model year of the vehicle.

  • Badge Variance

    If any badge or other indication on the vehicle relates to a different model than the model of the vehicle, a statement to that effect.

  • Cost of Repair if Over $3,000

    If the total costs of repairs to fix the damage caused to the vehicle by an incident exceed $3,000, a statement to that effect and if the dealer knew the total costs, a statement of the total costs.

  • Manufacturer's Warranty Cancellation

    If the manufacturer’s warranty on the vehicle was cancelled, a statement to that effect.

  • Insurance Total Loss

    If the vehicle was declared by an insurer to be a total loss, regardless of whether the vehicle was classified as irreparable or as salvage [under HTA 199.1], a statement to that effect.

  • If Non-Ontario Equivalent to Ontario Permit Requirements [under HTA 7]

    If the vehicle previously received treatment in a jurisdiction other than Ontario that was equivalent to having had a permit issued under section 7 of the Highway Traffic Act or having been traded in Ontario, a statement to that effect and a statement of which jurisdictions - except if one or more permits have been issued for the vehicle under section 7 of that Act to cover at least the seven previous consecutive years.

  • Irreparable, Salvage or Rebuilt Classification

    If the vehicle has been classified, under section 199.1 of the Highway Traffic Act, as irreparable, salvage or rebuilt, a statement as to how it was last classified.

  • Recovered After Stolen

    If the vehicle had been recovered after being reported stolen, a statement to that effect.

  • Other Factors Likely to Influence Purchase or Lease

    Any other fact about the vehicle that affects the structural or mechanical quality or performance of the vehicle and that, if disclosed, could reasonably be expected to influence the decision of a reasonable purchaser or lessee to buy or lease the vehicle.
For purposes of the above rules, "used motor vehicle" means [Code Reg 1]:
  • a motor vehicle for which an HTA permit has been issued [either under HTA 7 ('permit requirements') or by another jurisdiction having an equivalent requirement], or

  • a motor vehicle that has been used in a way for which a permit would have been required under HTA 7,

    but does not include a motor vehicle if,

  • the first permit for the vehicle was issued to a customer from a dealer, and

  • the customer did not take possession of the vehicle and it remained in the possession of the dealer until a new permit was issued to the dealer within 14 days after the issuance of the first permit for the vehicle.

4. Where Trade-In and Undertaking re Loan or Costs

Dealers, or third party dealers, taking a trade-in on the purchase or lease of a motor vehicle sometimes undertake to pay off any remaining loans or to pay any outstanding bill for the repair or storage on the traded-in vehicle. In that case the dealer who receives the traded-in motor vehicle has the duty to fulfil the undertaking [Code Reg 9(5)].


5. Disciplinary Procedures

(a) General

Complaints are made to the registrar of the OMVIC board, who has the discretion to "(r)efer the matter, in whole or in part, to the discipline committee" [Act 14(4)].

(b) Limitation

There is an unusual two-year limitation period on complaints. Rather than counting from the date of the events of the complaint, it counts from when the "facts upon which the complaint is based first came to the knowledge of the registrar". The registrar has two years to make the referral to the discipline committee [Code Reg 13]. If such a referral is made in time, then there does not appear to be any further limitation operative in that matter. If not, the complainant appears to be without recourse.

(c) Procedures

When a complaint is referred to the disciplinary committee "the chair of the committee shall assign a [SS: minimum three-member] panel in accordance with this section to hear and determine the matter" [Code Reg 14(1-4)].

Disciplinary committee hearings are governed by the Statutory Powers Procedure Act (SPPA), which has it's own Isthatlegal guide: Administrative Law (SPPA) Legal Guide. There is also a topically-indexed Isthatlegal case extract section here: Administrative Law.

"If a hearing before the discipline committee is closed to the public, the committee may order that evidence given and submissions made at the hearing not be disclosed to any member of the public" [Code Reg 16].

There are Rules of Practice Before the Discipline Committee and the Appeals Committee.

(d) Orders

If the discipline committee makes a determination that "a registrant has failed to comply with the code of ethics" they may order any of the following [MVDA 17(4)]:
  • Education Courses

    Require the registrant to take further educational courses [MVDA 17(8)].

  • Fund Education Courses for Salespeople

    Require the dealer to fund educational courses for salespersons employed by them or to arrange and fund such courses [MVDA 17(9-10)].

  • Fines

    Impose fines to a maximum of $25,000 to be paid by the registrant to OMVIC [MVDA 17(7)].

  • Suspend Any of the Above

    Suspend or postpone the taking of further educational courses, the funding - or the funding and arranging - of educational courses, or the imposition of the fine.

  • Costs

    Fix and impose costs to be paid by the registrant to the OMVIC.
Decisions of the discipline committee shall be made available to the public [MVDA 17(11)].

(e) Parties and Service of the Decision

Parties to a hearing are [Code Reg 15]:
  • the registrant who is the subject of the proceeding;

  • OMVIC, and

  • any other person that the committee adds as a party.
Service of any final decision or order ("including the reasons if any have been given": SPPA 18) of the disciplinary committee shall be made in accordance with Ch.7: General SPPA Rules: Orders, s.3(c) Final Orders - Service. Such service shall include a notice of "the party’s right to appeal ... and the procedures applicable to an appeal" [Code Reg 18].

As well, if the complaint was made by a person or entity who is not a party (as above) to the hearing, "the committee shall send the person a copy of its determination or order, including the reasons if any that it has given, at the same time" as they perform the above service [Code Reg 17].


6. Appeals

(a) General

A party to the discipline proceeding may appeal the final order of the discipline committee to the appeals committee [MVDA 17(5)]. The appeals committee may by order overturn, affirm or modify the order of the discipline committee [MVDA 17(6)].

(b) Appeal Procedures

Such appeal may be commenced by delivering to the appeals committee (with the required fee) within 30 days of "the discipline committee send(ing) notice" - and serving the other parties and the discipline committee, with the Notice of Appeal [Code Reg 19(1-3)]. The Notice of Appeal shall include:
  • identifies the appellant and the other parties to the appeal,

  • identifies the order being appealed,

  • sets out the grounds for the appeal, and

  • sets out the relief that is sought.
The discipline committee shall at the "earliest practical opportunity" forward to the appeals committee their record [under SPPA 20] [Code Reg 19(4)].

Decisions of the appeals committee shall be made available to the public [MVDA 17(11)].

There are Rules of Practice Before the Discipline Committee and the Appeals Committee.

Appeals shall be heard by a minimum three-member panel [Code Reg 20(1-5)].

Parties to an appeal proceeding are [Code Reg 21]:
  • the appellant,

  • the other persons who were parties to the proceeding before the discipline committee, and

  • any other person that the appeals committee adds as a party.
If a hearing before the appeals committee is closed to the public, the committee may order that evidence given and submissions made at the hearing not be disclosed to any member of the public [Code Reg 16,22].

As well, if the complaint was made by a person or entity who is not a party (as above) to the hearing, the committee "shall send the person a copy of its determination or order, including the reasons if any that it has given" [Code Reg 17,22].

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