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

Ch.1 - The Statutory Context

  1. General
  2. Common Law
  3. Sale of Goods Act (SGA)
  4. Consumer Protection Act
    (a) Overview
    (b) CPA Exemptions for MVDA Transactions
    (c) Remaining CPA Rights and Remedies
    (d) Warranties
  5. Highway Traffic Act
    (a) Generally
    (b) Permit Transfer on Sale or Ending Lease of a Permitted Motor Vehicle
    (c) Safety Standards Certificate
    (d) Used Vehicle Information Package (UVIP)
    (e) All Motor Vehicles Must Comply with the Motor Vehicle Safety Act (Canada)
  6. The Motor Vehicle Dealers Act (MVDA)
    (a) Overview
    (b) Common Law and MVDA Remedies Contrasted
    (c) The Civil Courts Remedies
    (d) Administrative Matters



1. General

Under the common law motor vehicles are 'chattels', ie. personal (as opposed to real estate) property. Dealing with them, either selling, buying or leasing - is fundamentally a matter of contract law, with tort law a frequent companion.

No doubt due to the popularity of motor vehicles and the size of the market, the Ontario legislature has supplemented this common law with a small multitude of statutes - some of which may not directly relate to transactions involving motor vehicles, but do nonetheless bear on the trade:
  • the Sale of Goods Act ("SGA");

  • the Consumer Protection Act, 2002 ("CPA");

  • the Highway Traffic Act ("HTA"), and

  • Motor Vehicle Dealers Act ("MVDA").
I include some aspects of the Highway Traffic Act ("HTA") in this "Motor Vehicle Dealing (Ontario) Legal Guide" (the "Guide"), since they involve necessary ancillary steps to engaging in trade in motor vehicles, either privately or commercially.

The Sale of Goods Act ("SGA"), applies to all trade in chattels - of which motor vehicles are one type, again privately or commercially. These laws are normally enforced through the civil courts.

The Consumer Protection Act, 2002 ("CPA") applies only to 'consumers': ie. an "individual acting for personal, family or household purposes and does not include a person who is acting for business purposes" [CPA 1]. CPA laws are also normally enforced through the civil courts.

The Motor Vehicle Dealers Act ("MVDA"), which forms the bulk of this Guide, offers a full range of substantive (rights) law requirements - and as well several remedies, both court and administrative. The MVDA has several remedial methods against commercial motor vehicle dealers:
(a) disclosure requirements (borrowing from the field of consumer law with it's emphasis on mandatory commercial dealer disclosure), enforceable in a limited sense through the civil courts,

(b) an administratively-enforced Code of Ethics, and

(c) a 'last-resort' Fund system, where customers can hope to realize compensation for malfeasance by dealers.
The Statutory Powers Procedure Act ("SPPA") is Ontario's administrative procedural code, that anyone involved in administrative (non-court) law (as we are with the MVDA) is hard-pressed to avoid these days.


2. Common Law

The common law is huge and hugely varied, and in this present context involves Contract and Torts.

By it's typical facts, the law the most applicable to the motor vehicle transactions are the contract doctrine of misrepresentation, and the tort doctrines of negligent and fraudulent misrepresentation.

In Issa v. Wilson (Ont CA, 2020) the Court of Appeal succinctly states the rescission remedy (roughly, 'cancellation') for misrepresentation:
[12] The remedy of rescission of a contract may be obtained on the basis of misrepresentation where the defendant made a false statement that was material and induced the plaintiff to enter into the contract: Panzer v. Zeifman et al. (1978), 1978 CanLII 1658 (ON CA), 20 O.R. (2d) 502 (C.A.), at p. 5; Singh v. Trump, 2016 ONCA 747, at para. 156.
It's no mistake that the rescission remedy is so central to Ontario consumer legislation, as follows:
CPA 93(1)
A consumer agreement is not binding on the consumer unless the agreement is made in accordance with this Act and the regulations.
That said, rescission and misrepresentation are only some of the common law principles that can apply to motor vehicle transactions, the range is far greater than that. Common law remedies are implicitly preserved in a little-publicized section of the Motor Vehicle Dealers Act (MVDA):
MVDA
30(2) If a motor vehicle dealer fails to make a disclosure as required under subsection (1) or fails to do so in a timely way, in addition to any other remedies that may be available, the person to whom disclosure should have been made is entitled to such other remedies as may be prescribed.
That brief phrase: "in addition to any other remedies that may be available" does two important things. Firstly, it implicitly incorporates the general common law of contract and tort in motor vehicle trading (as they are chattels).

Secondly, with it's reference to the MVDA dealer disclosure duties, it arguably suggests that breach of the dealer disclosure duties acts as an actionable 'misrepresentation' under the common law as well. Any argument that the MVDA is the 'exclusive code' to address motor vehicle dealing disputes, is defeated until the common law is 'unequivocally' revoked by a statute, which has not occured here: [R v Parker v. Yundt et al (Ont Sup Ct, 2012), paras 16-18].

In my view, given the limited rights and remedies set out in the MVDA (which you will see in the balance of this Guide), the MVDA can be viewed as a weak supplement - almost deceptive in shifting the legal focus away from the available common law remedies to it's extensive, but thin, administrative and statutory scheme.


3. Sale of Goods Act (SGA)

The primary significance of the SGA is that of statutory warranties.

For example, unless the sales contract shows otherwise, it is an implied condition that the seller is entitled to sell the goods (ie. the seller owns them, will own them at the time required, or is the legitimate agent for someone who does or will) and that they are free from undisclosed encumbrances (ie. no unstated outstanding liens, executions, chattel mortgages or similar claims) [SGA s.13]

As well, there is an 'implied condition of fitness' that the goods are suitable for the purchaser's specific purpose, and an 'implied condition of merchantability' (freedom from defects) where the seller regularly deals in the product and the purchaser has not inspected the goods before purchase [SGA s.15].


4. Consumer Protection Act

(a) Overview

Understanding the interaction between the MVDA and the CPA requires a bit of CPA background. As mentioned above, Ontario consumer law is heavily reliant on the methodology of 'disclosure' (and conditional cancellation rights), no doubt as a political favouring of the concept that consumers should be free to make their own choices. This concept is supplemented by the idea that they need help - in this heavily-specialized product area - to be adequately informed for the market to work effectively and to be allowed a 'second-chance' to reconsider their purchase decisions.

The MVDA-CPA 'marriage' may for the most part be simply understood as a replacement of the general CPA disclosure requirements with those of the MVDA [set out in Ch.4].

Relevantly, the CPA also has related provisions on Motor Vehicle Repair and Chattel Leases.

(b) CPA Exemptions for MVDA Transactions

The "supply of goods or services pursuant to an agreement that is subject to ... the Motor Vehicles Dealers Act [SS: the 'old' Act] or the Motor Vehicle Dealers Act, 2002" is exempt from CPA rules governing the following topics [CP Reg 9(1)1,(2)]:
  • content and disclosure requirements for future performance agreements [see the CPA guide at Ch.3, s.2(b) "Forms of Consumer Agreements: Future Performance Agreements: Content and Disclosure Requirements for Future Performance Agreements"]

  • consumer cancellation rights on non-delivery of consumer agreement [see the CPA guide at Ch.3, s.2(c) "Forms of Consumer Agreements: Future Performance Agreements: Consumer Cancellation Right on Supplier Default re Consumer Agreement Delivery"]

  • consumer cancellation rights on late performance [see the CPA guide at Ch.3, s.2(d) "Forms of Consumer Agreements: Future Performance Agreements: Consumer Cancellation Right Where Late Performance; Exceptions"]

  • internet agreements [see the CPA guide at Ch.3, s.4: "Forms of Consumer Agreements: Internet Agreements"]

  • direct agreements [see the CPA guide at Ch.3, s.3: "Forms of Consumer Agreements: Direct Agreements"]

  • remote agreements [see the CPA guide at Ch.3, s.5: "Forms of Consumer Agreements: Remote Agreements"]
(c) Remaining CPA Rights and Remedies

Other than those CPA exemptions, motor vehicle transactions - at least for 'consumers' ["individual acting for personal, family or household purposes and does not include a person who is acting for business purposes" (CPA 1)] - are otherwise subject to the extensive CPA protections, particularly the 'unfair practice' protections: Consumer Law (Ontario) Legal Guide.

(d) Warranties

Particularly relevant are the still-remaining CPA warranties. The Consumer Protection Act [CPA s.9(2)] clarifies that the (above) SGA "implied conditions and warranties" apply to consumer transactions for the sale of goods, and extends it as well to the leasing of goods (chattels) "with necessary modifications" [chattel leases are linked above]. In short, these SGA warranties are adopted into CPA law.

Additionally, the CPA also 'deems' (imposes) a warranty of fitness "of reasonably acceptable quality" to consumer services [CPA s.9(1)]. This parallels the similar SGA warranty for goods (above).


5. Highway Traffic Act

(a) Generally

The main relevance of the HTA to motor vehicle dealing is the 'permit' requirements, as follows.

Motor vehicle 'permits' comprise two parts: the vehicle portion and the plate portion [HTA 6(1)]. No person shall drive a motor vehicle on a highway unless they hold and carry a currently validated permit for the vehicle [HTA 7(1)(a),(5)] and the current validation of the permit is affixed to the number plates [HTA 7(1)(c), VP Reg 6(2)].

(b) Permit Transfer on Sale or Ending Lease of a Permitted Motor Vehicle

When the owner or lessee of a motor vehicle for which a permit is held, sells or ends the lease of it, they must [HTA 11(1)]:
  • remove his, her or its number plates from the vehicle;

  • retain the plate portion of the permit; and

  • on delivery of the vehicle:

    . to the new owner, complete and sign the transfer application of the vehicle portion of the permit including the date of the delivery and give that portion of the permit to the new owner, or

    . to a lessor, give the vehicle portion of the permit to the lessor.
"Every person shall, within six days after becoming the owner of a motor vehicle or trailer for which a permit has been issued, apply to the Ministry, on the form provided therefor, for a new permit for the vehicle" [HTA 11(2)].

(c) Safety Standards Certificate

When a motor vehicle is used then the applicant for a permit must "submit a safety standards certificate ("SSC") issued upon an inspection of the vehicle that was completed within the preceding 36 days" [HTA VP Reg 2(1)(a)]. Safety Standards Certificates may be issued by a motor vehicle inspection station licensee, and are evidenced by a "vehicle inspection sticker" [HTA s.90(1-3)].

Exceptions to this requirement operate (amongst other circumstances) for [HTA VP Reg 2(2)]:
  • transfers to the spouse or the estate of the previous owner; and

  • MVDA dealers, other than brokers.
If an application for a permit is made and no SSC is submitted, an "unfit motor vehicle" permit may be issued [HTA VP Reg 2(7)]. Driving or operating, or permitting same of a vehicle that "are in a dangerous or unsafe condition" is prohibited [HTA 84(1)].

(d) Used Vehicle Information Package (UVIP)

A "used vehicle information package" is issued by the "Ministry of Consumer and Commercial Relations or the Ministry of Transportation containing information on registrations relating to a used motor vehicle made under the Personal Property Security Act and the Repair and Storage Liens Act and the Ontario registration history of the vehicle" [UVIP Reg 1]. This is useful legal information to determine if the motor vehicle has any liens or other encumbrances against it.

This is the same topic that was addressed under the "s.3 Sale of Goods Act (SGA)" section above, regarding warranties of title [SGA s.13].

When a person buys a used car, the seller must "provide a valid used vehicle information package (UVIP) in respect of the vehicle for inspection by proposed purchasers or transferees" and shall give the package to the buyer at the time of sale of the vehicle [HTA 11.1(1)]. UVIPs are available at the Ministry for a $20 fee [UVIP Reg 5] [HTA 11.1(2)]. In order to get a new permit for the motor vehicle this purchaser must provide the Ministry with the UVIP provided to them by the seller [HTA 11.1(3)].

There are exemptions to the UVIP requirement to give the UVIP to the purchaser [HTA UVIP Reg 2] [including dealers selling to customers and anyone selling to a dealer, other than a broker: HTA UVIP Reg 2(10-10.1)]. There are also exemptions to providing the UVIP to the Ministry on a permit application [including dealers purchasing, or customers buying fron a dealer, other than a broker: HTA UVIP Reg 3(10-10.1)] [HTA UVIP Reg 3].

(e) All Motor Vehicles Must Comply with the Motor Vehicle Safety Act (Canada)

Motor vehicle dealers may only sell or offer for sale motor vehicles that "conform to the standards required under the Motor Vehicle Safety Act (Canada) (MVSA) [HTA 105(1)]. The federal MVSA is safety standard legislation which regulates, among other things, when a "national safety mark" may be applied to motor vehicles sold or imported in Canada.


6. The Motor Vehicle Dealers Act (MVDA)

(a) Overview

Under the MVDA a "motor vehicle means an automobile, truck or other vehicle propelled or driven otherwise than by muscular power, including a motorcycle, but not including a motorized snow vehicle or a farm tractor or other self-propelled machinery primarily intended for farming or construction purposes [MVDA 1(1)].

As is set out in the following MVDA chapters, the Ontario Motor Vehicle Dealers Act (MVDA) is essentially conventional Ontario consumer legislation. In fact, as is set out in s.4 above ["Consumer Protection Act (CPA)"], but for substitution of the CPA disclosure with MVDA counterparts (and a few other changes), the bulk of the Consumer Protection Act still applies to the trade in motor vehicles - at least for consumers buying or leasing from MVDA-registered dealers (who are the bulk of customers).

The MVDA has two additional quasi-remedial regimes: the 'Code of Ethics' and the (truly) last-resort 'Motor Vehicle Dealers Compensation Fund'. These both appear, on first review, to me to be too top-heavy in both administrative and practical requirements that they are not worth the legislative ink. I welcome contrary perspectives.

(b) Common Law and MVDA Remedies Contrasted

While all of the above statutes (as indicated) have application to motor vehicle 'deals', the bulk of this Guide (below) is devoted to the MVDA. I view the MVDA disclosure provisions [Ch. 4: "Types of Contracts and Disclosure"] as very useful themselves in their disclosure role (in the few instances when people read them), but I view the 'cancellation' remedies [Ch.4, s.11: Statutory Cancellation Remedy for Mis-disclosure of History] as only a weak add-on to the common law remedies.

Firstly, not all breach of the MVDA disclosure provisions entitles the customer to rely on the cancellation (and subsequent lawsuit remedies) [MVDA General Reg 42, 50(1)(a-d)]. Also, the short cancellation limitation period of 90 days "after actually receiving the motor vehicle" to exert their cancellation right is far inferior to the general contractual two-year lawsuit limitation set out in s.4 of the Limitations Act, 2002 [Reg 50(5)].

As well, if an aggrieved customer wishes to use any breach use of the MVDA's disclosure dealer duties (and there are many) as a tort ground for a common law lawsuit, they must still hurdle the doctrine set out in The Queen v Saskatchewan Wheat Pool (SCC, 1983), which concluded:
1. Civil consequences of breach of statute should be subsumed in the law of negligence.

2. The notion of a nominate tort of statutory breach giving a right to recovery merely on proof of breach and damages should be rejected, as should the view that unexcused breach constitutes negligence per se giving rise to absolute liability.

3. Proof of statutory breach, causative of damages, may be evidence of negligence.
In short, breach of a disclosure duty alone does not automatically give rise to a common law tort claim, and one must still advance their case under negligence or other tort law (although, under Saskatchewan Wheat Pool, disclosure breach may be advanced as evidence of breach).

(c) The Civil Courts Remedy

As with most common law rights, the forum in which they are advanced is the 'regular' civil courts, here the Small Claims Court (having monetary jurisdiction for claims up to $35,000 at the date of writing) or the Superior Court (for higher claims).

(d) Administrative Matters

Insofar as the Motor Vehicle Dealers Act (MVDA) involve administrative (non-court) proceedings, it will be governed by the Statutory Powers Procedue Act (SPPA) (unless they are any express statutory exceptions from SPPA application, and I have not found any on review).

The SPPA is the subject of it's own Administrative Law (Ontario)(SPPA).

In addition the MVDA has express provisions regarding service of documents and a few other matters, following:
  • Service

    Service of "(a)ny notice, order or request is sufficiently given or served if it is [MVDA 37(1]:
    • delivered personally;

    • sent by registered mail [service by registered mail is deemed made "on the third day after the day of mailing" unless otherwise proven by the recipient: MVDA 37(2)];

    • sent by another manner if the sender can prove receipt of the notice, order or request";

    • any other method of substituted service [only if ordered by the License Appeal Tribunal (LAT)] [MVDA 37(3)].
  • Fees

    OMVIC may establish fees "in respect of registration, renewal of registration, late filings and other administrative matters" [MVDA 38(1-3)].

  • Evidence Certificates

    For all purposes, both administrative and court, a unsigned statement "purporting to be certified by the director is, without proof of the office or signature of the director, admissible in evidence as proof in the absence of evidence to the contrary, of the facts stated in it in relation to [MVDA 39(1-2)]:
    • the registration or non-registration of any person;

    • the filing or non-filing of any document or material required or permitted to be filed with the registrar;

    • the time when the facts upon which the proceedings are based first came to the knowledge of the director; or

    • any other matter pertaining to registration or non-registration of persons or to filing or non-filing of information."
LAT (License Appeal Tribunal) Rules are located on this page: LAT Rules


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