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OMVIC Blog: Car Buying Tips

Selling Unsafe Vehicle Costs Dealer $62,000

Oct 18

Written by: OMVIC Communications
Thursday, October 18, 2018  RssIcon

A North York dealer and its director have been fined $45,000 and ordered to pay $17,313 in restitution to a customer who purchased a car that was unsafe for the road.


Background

On a wintery day in 2016, roads slicked with freezing rain, Tian Cheng Kuang was behind the wheel of his 2013 Mercedes Benz C350 and found himself sliding into the Hyundai Sedan stopped in front of him. Kuang stated he wasn’t going fast but when he stepped from his car he found “the front end almost fell off,” and he wondered, “how come my Mercedes Benz isn’t stronger than a Hyundai?” The answer, it turned out, had everything to do with the history of the Mercedes and resulted in the dealer who sold Kuang the car being charged by OMVIC, Ontario’s vehicle sales regulator, for making false, misleading or deceptive representations in contravention of the Consumer Protection Act (CPA).

The Mercedes was purchased in October 2015 from Signature Motor Car Inc., then located at 1125 Finch Avenue West, in North York. At that time, Kuang says he was told the car had been in a previous accident, but it had been repaired, passed a safety inspection and was “100 percent safe” and that he could “drive without a worry.” He did not understand the vehicle had actually suffered an estimated $31,144 damage in a 2014 collision; was deemed a total loss and branded as Salvage; and was then repaired and rebranded as Rebuilt. Nor did Kuang know the Structural Inspection Certificate that was used to change the brand from Salvage to Rebuilt, allowing the vehicle to be plated and driven again, contained false information and should not have been issued by the inspection station.

“The consumer did not receive clear, comprehensible, and prominent disclosure of the vehicle’s past as required by the Motor Vehicle Dealers Act,” explained Don Cousens, Manager of Investigations for OMVIC. “Nor did he know that the Mercedes had been repaired so poorly after the 2014 collision, or by means completely outside of industry norms, as to be largely hazardous.”


Evidence

Evidence presented at trial demonstrated the vehicle was outright missing components, while some other components that should have been replaced were instead repaired. The court also heard there were open welds, a portion of the bumper was held on with a zip-tie and a frame rail and a sub-frame component had been welded even though that type of repair is not allowed. According to a Ministry of Transportation Branding Officer who also testified, the repairs left the car looking like “a dog’s breakfast”; the structural integrity of major components had been severely damaged and the vehicle was unsafe for the road.

OMVIC’s investigation found Signature Motor Car Inc. had purchased the Mercedes from a salvage auction in 2014 and paid to use an unlicensed body repairer to conduct the repairs; repairs that cost the dealer less than one-third of an insurance company’s $31,144 repair estimate. Kuang told OMVIC that when he approached the dealer after his collision, explaining that the car was unrepairable; not because of the $8,185 damage he’d caused rear-ending the Hyundai, but because of the improper repairs done by Signature’s repairer, he got nowhere.

“Once OMVIC became involved, we investigated the entire transaction,” stated John Carmichael, OMVIC CEO and Registrar. “This led to additional concerns about possible false representations made by the dealer in regards to financing and the fact the sales contract did not accurately reflect the true nature of the transaction. Negative equity from Kuang’s trade-in had been disguised on the bill of sale.”


Charges

Signature Motor Car Inc. and it’s officer and director Riath Haydar, were charged by OMVIC under the Consumer Protection Act for committing unfair business practices, where the accused allegedly:

  • paid for an unlicensed body repairer to conduct repairs to rebuild the vehicle, without proper follow up
  • misrepresented the quality and condition of the vehicle
  • omitted certain mandatory disclosures on the bill of sale, including:
    • a declaration that the vehicle was previously a total loss; 
    • the total cost of the actual repairs ($8,500)
  • provided limited disclosures that were illegible or hastily written
  • exaggerated the meaning and significance of a Safety Standards Certificate, when showcasing it
  • misled Mr. Kuang about his financing options and eligibility
  • failed to separate the negative equity from the purchase price on the vehicle’s Bill of Sale

At trial, Haydar denied direct involvement in the repair process and admitted no wrongdoing. Her Worship Justice Lau, who presided over the court proceedings, found the testimony of Haydar, and of a body repairer called by the defence, to be inconsistent, uncorroborated and self-serving.


Convictions

Both Signature and Haydar were convicted of committing unfair practices in contravention of the CPA. Riath Haydar was fined $15,000; Signature Motor Car Inc. was fined $30,000; and the defendants were jointly ordered to pay restitution to Mr. Kuang totalling $17,313.

“OMVIC sought an outcome that provided deterrence and compensation,” explained Carmichael. “With fines and restitution totalling $62,313 in this matter, a strong message has been delivered and a wrong has been righted.”


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