Ontario (Min. of Gov. and Con. Services) v. Ivan’s Electric Limited, 2017 ONCJ 227

CITATION: Ontario (Min. of Gov. and Con. Services) v. Ivan’s Electric Limited, 2017 ONCJ 227 DATE: April 4, 2017 ( amended after judgment had been released ) I N THE MATTER OF the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A . and Ontario Regulation 17/05 Between Her Majesty The Queen In Right Of Ontario As Represented By The Ministry of Government And Consumer Services prosecutor and Ivan’s Electric Limited,< Ivan Valovic, Insight Electric Inc., and Peter Valovic defendants Ontario Court of Justice Brampton, Ontario Quon J.P.

Reasons for Judgment Trial held : Oct. 9, 15, 16, 17, 29, 30 and 31, 2014; Nov. 12, 13, 19, and 20, 2014 April 9, 22, and 23, 2015; May 13, 14, and 27, 2015; March 17, 23, and 24, 2016; Oct. 27 and Nov. 2, 2016.

Judgment released: April 4, 2017. Counsel: G. Ludlow and J. Chiang, counsel for the Ministry of Government and Consumer Services. T. Hein and J. Noonan, counsel for the defendants. Charges: (1) failing to deliver to a consumer a direct agreement containing the information required by s. 35(1) of the O.

Reg. 17/05, contrary to s.42 of the CPA 2002, thereby committing an offence under s. 116(2) of CPA 2002 (13 counts totaling 36 charges); (2) failing to take reasonable care, as a director of the corporation, in preventing the corporation from failing to deliver to aconsumer a direct agreement containing the information required by s. 35(1) of the O.

Reg. 17/05, contrary to s. 42 of the CPA 2002, andthereby committed an offence under s. 116(3) of CPA 2002 (8 counts totaling 8 charges). (3) failing to refund to a consumer within 15 days after the date the said consumer gave notice of cancellation, contrary to s. 96(1)(

a) of CPA 2002, thereby committing an offence under s. 116(1)(b)(viii) of CPA 2002 (8 counts totaling 26 charges); (4) failing to take reasonable care, as a director of the corporation, in preventing the corporation from failing to refund to aconsumer within 15 days after the date the said consumer gave notice of cancellation, contrary to s. 96(1)(

a) of the CPA 2002, andthereby committed an offence under s. 116(3) of CPA 2002 (6 counts totaling 6 charges); (5) engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer, contrary to s. 17(1)CPA 2002, thereby committing offence under s. 116(1)(b)(ii) of CPA 2002 (7 counts totaling 23 charges); and (6) failing to take reasonable care, as a director of the corporation, in preventing the corporation from engaging in an unfairpractice by making a false, misleading or deceptive representation to a consumer, contrary s. 17(1) of the CPA 2002, thereby committingoffence under s. 116(3) of CPA 2002 (4 counts totaling 4 charges); Cases Considered or Referred To: Blue Mountain Resorts Ltd. v.

Bok, 2013 ONCA 75 , [2013] O.J. No. 520 (O.C.A.), per MacPherson, Armstrong and Blair JJ.A. Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, (SCC), [1996] 3 S.C.R. 727 (S.C.C.). Country Cottage Living Inc. v. Heath, [2009] O.J. No. 4994 (QL) (S.C.J.O.), per Mulligan J. Fazari v. Simpson, [2011] O.J. No. 4573 (Ont. Div. Ct.), per Eberhard J. Matoni v. C.B.S. Interactive Multimedia Inc. (c.o.b. Canadian Business College), (ON SC), [2008] O.J. No. 197(S.C.J.O.), per Hoy J.

Memorial Gardens Ontario Ltd. v. Ontario, (ON CA), [1992] O.J. No. 98 (O.C.A.), per Brooke, Tarnopolsky, andDoherty JJ.A. Ontario v. Canadian Pacific Ltd., (SCC), [1995] 2 S.C.R. 1031 (S.C.C.). Ontario (Ministry of Labour) v. Enbridge Gas Distribution Inc., 2010 ONSC 2013 (S.C.J.O.), per Bellamy J. Ontario (Ministry of Labour) v. Enbridge Gas Distribution Inc., 2011 ONCA 13 (O.C.A.), per Watt J.A. Ontario (Ministry of Labour) v. Hamilton (City) (2002), (ON CA), 58 O.R. (3d) 37 (O.C.A.), per Sharpe J.A. Ontario (Ministry of Consumer Services) v. K-Tech Building Systems Inc., [2012] O.J.

No. 1764 (O.C.J.), per Quon J.P. R. v. Briscoe, 2010 SCC 13 , [2010] 1 SCR 411 (S.C.C.). R. v. Castro, 2010 ONCA 718 (O.C.A.), per Weiler, MacPherson and Armstrong JJ.A. R. v. Cotton Felts Ltd. (1982), (ON CA), 2 C.C.C. (3d) 287 (O.C.A.), per Martin, Zuber and Blair JJ.A. R. v. Devgan, (ON CA), [1999] O.J. No. 1825 (O.C.A.), per Labrosse, Charron and Feldman JJ.A. R. v. Elm Tree Nursing Home Inc., [1987] O.J. No. 491 (O.C.A.), per Goodman, Cory and Finlayson JJ.A. R. v. Hundal, (SCC), [1993] S.C.J. No. 29 (S.C.C.). R. v. Hutchinson, 2014 SCC 19 , [2014] 1 S.C.R. 346 (S.C.C.). R. v.

Isaac, (SCC), [1984] 1 S.C.R. 74 (S.C.C.). R. v. Jordan, 2016 SCC 27 (S.C.C.). R. v. Kienapple, (SCC), [1975] 1 S.C.R. 729 (S.C.C.). R. v. Logeman (1978), (BC CA), 5 C.R. (3d) 219 (B.C.C.A.). R. v. McCague, 2006 ONCJ 208 (O.C.J.), per Trotter J. R. v. Prince, (SCC), [1986] 2 S.C.R. 480, [1986] S.C.J. No. 63 (S.C.C.).

R. v. Sault Ste. Marie, (SCC), [1978] 2 S.C.R. 1299, 40 C.C.C. (2d) 353 (S.C.C.). R. v. Thatcher, (SCC), [1987] 1 S.C.R. 652 (S.C.C.). R. v. Valovic, [2009] O.J. No. 6494 (S.C.J.O.), per Belleghem J. R. v. Vu, 2012 SCC 40 , [2012] S.C.J. No. 40 (S.C.C.). R. v. Wigglesworth, (SCC), [1987] S.C.J. No. 71 (S.C.C.). Ramdath v. George Brown College of Applied Arts and Technology, [2013] O.J. No. 3151 (O.C.A.), per MacPherson, Cronk andRouleau JJ.A., affirming [2012] O.J. No. 5389 (S.C.J.O.), per Belobaba J. Richard v. Time Inc., 2012 SCC 8 , [2012] S.C.J. No. 8 (S.C.C.).

Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1SCR 27 (S.C.C.). Tamarack North Holdings Ltd. (c.o.b. Tamarack North Ltd.) v. Hallisey, [2007] O.J. No. 66 (S.C.J.O), per Wood J. Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79, 2003 SCC 63 , [2003] S.C.J. No. 64 (S.C.C.). Weller v. Reliance Home Comfort Limited Partnership, 2012 ONCA 360 , [2012] O.J. No. 2415 (O.C.A.), per Rosenberg,Juriansz, and Rouleau JJ.A. Cases on amending an information: Deaville v. Boegeman, (ON CA), [1984] O.J. No. 3403 (O.C.A.), per Mackinnon A.C.J.O., Zuber, and TarnopolskyJJ.A. Ontario (Ministry of Labour) v.

Ivaco Inc., (ON SC), [2001] O.J. No. 1329 (S.C.J.O), per Heeney J. Ontario (Ministry of Labour) v. NMC Canada Inc., (ON CA), [1995] O.J. No. 2545 (O.C.A.), per Finlayson, Abellaand Laskin JJ.A. Ontario (Ministry of Labour) v. Rahnmet Inc., [2009] O.J. No. 5418 (O.C.J.), per Bubba J.P. R. v. J.F. Brennan & Associates Inc. (1981), (ON SC), 61 C.C.C. (2d) 1 (O.H.C.), per Osler J.

R. v. Cote (1977), (SCC), 33 C.C.C. (2d) 353 (S.C.C.). R. v. Doukas, [1996] O.J. No. 1705 (O.C.J. (Prov. Div.), per August J. R. v. Gunn, [1982] S.C.J. No. 23 (S.C.C.). R. v. Irwin, (ON CA), [1998] O.J. No. 627 (O.C.A.), per Catzman, Doherty and Austin JJ.A. R. v. Kimberly-Clark Canada Inc. (August 21, 1995) (Ont. Prov. Div.), per Bice J. R. v. Larizza, [2006] O.J. No. 5335 (O.C.J.), per Pelletier J. R. v. Lorenzo, [2002] O.J. No. 4850 (O.C.J.), per Quon J.P. R. v. McConnell, (ON CA), [2005] O.J. No. 1613 (O.C.A.), per Laskin, Rosenberg, and LaForme JJ.A. R. v. Paul Magder Furs Ltd., (ON CA), [1989] O.J.

No. 531 (O.C.A.), per Lacourciere, Houlden and Morden JJ.A. R. v. Petrecca, [2013] O.J. No. 6160 (O.C.J.), per D.A. Harris J. R. v. Preston Sand & Gravel Co., [2009] O.J. No. 6399 (O.C.J.), per Frazer J. R. v. Roberts, [2001] O.J. No. 4645 (O.C.J.), per Jackson J. R. v. Salim; R. v. Escobar; R. v. Chung; R. v. Ferlisi, [2000] O.J. No. 507 (S.C.J.O), per MacKinnon J. R. v. Seenanan, [2004] O.J. No. 1121 (O.C.A.), per Abella, Goudge, and Gillese JJ.A. R. v. Silverstrone, [2007] O.J. No. 4855 (S.C.J.O.), per Whitten J. R. v. Thomas Fuller Construction Co., [2008] O.J. No. 4004 (O.C.J.), per Wake J.

Thermoset Thermoplastic Custom Moulder Ltd. v. Ontario (A.G.), [1992] O.J. No. 2455 (Ont. Ct. (Gen. Div.)) per Caswell J. York (Regional Municipality) v. Talabe, [2011] O.J. No. 654 (S.C.J.O.), per Healey J. York (Regional Municipality) v. Winlow (2009), 2009 ONCA 643 , 99 O.R. (3d) 337 (O.C.A.), per Laskin, Gillese, and RouleauJJ.A. Cases on obligation to cross-examine witness on point of contradiction before arguing witness is not credible

R. v. Palmer, (SCC), [1979] S.C.J. No. 126 (S.C.C.). R. v. Verney, (ON CA), [1993] O.J. No. 2632 (O.C.A.), per Finlayson, McKinlay and Abella JJ.A. R. v. G.P. (1996), (ON CA), 112 C.C.C. (3d) 263 (O.C.A.), per Laskin, Rosenberg and Moldaver JJ.A. Rule in Browne v. Dunn (1893) 1893 CanLII 65 (FOREP), 6 R. 67 (H.L.). Cases on mistake of law as a defence La Souveraine, Compagnie d'assurance générale v. Autorité des marchés financiers, [2013] S.C.J. No. 63 (S.C.C.). R. v. Jorgensen, (SCC), [1995] 4 S.C.R. 55 (S.C.C.).

Statutes, Regulations, and Bills Cited: Bill 59, Putting Consumers First Act (Consumer Protection Statute Law Amendment) (An Act to enact a new Act with respect to homeinspections and to amend various Acts with respect to financial services and consumer protection), 2017, 2nd Sess., 41st Leg., Ontario,2017 (as of March 7, 2017, ordered for Third Reading), clause 16. Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched.

A., ss. 1, 14, 14(1), 14(2), 14(2)(10), 14(2)(13),14(2)(14), 14(2)(15), 14(2)(16),15, 15(1), 15(2), 15(2)(b), 15(2)(g), 16, 17(1), 17(2), 18(1), 18(3), 18(14), 20(1), 42, 43, 43(1), 43.1(1), 43(2), 88, 89(1), 91, 92, 92(1),92(2), 92(3), 94, 94(2), 95, 96(1), 96(1)(a), 98, 98(1), 99(1), 99(2), 116(1)(a), 116(1)(b)(ii), 116(1)(b)(vii), 116(1)(b)(viii), 116(2), and116(3). Electrical Safety Authority Regulation (Electricity Act, 1998), O. Reg. 89/99, s. 1. Electricity Act, 1998, S.O. 1998, c. 15, Sched. A. Evidence Act, R.S.O. 1990, c. E.23, ss. 20 and 21. General Regulation (Consumer Protection Act, 2002), O.

Reg. 17/05, ss. 17, 34, 35, 35(1), 35(1)(4), 35(1)(4)(i), 35(1)(6), 35(1)(9), 35(1)(11), 35(1)(13), 35(2), 79(1), 80(1), 83, 83(1), 83(1)(a), 83(2), 83(2)(a), 83(4), and 84. General Regulation (Safety And Consumer Statutes Administration Act, 1996), O. Reg. 187/09, s. 2. Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, s. 64. Provincial Offences Act, R.S.O. 1990, c. P.33, ss. 34, 34(1), 34(2), 34(4), 34(4)(c), 34(4)(d), 77(1), and 81.

Safety and Consumer Statutes Administration Act, 1996 , S.O. 1996, c. 19. Authorities Considered or Referred To: Black's Law Dictionary, 4th ed. (St. Paul, Minn.: West Publishing, 1968), p. 17, “abet”. Business Guide To Consumer Protection , online: Ministry of Government and Consumer Services website << http://www.sse.gov.on.ca/mcs/en/Pages/business_guide.aspx >>, “direct agreements”. Drinkwalter, W.D. and Ewart, J.D. Ontario Provincial Offences Procedure (Toronto, Canada: The Carswell Company Limited, 1980). Halsbury’s Laws of Canada, First edition (Markham, Ont.: Lexis Nexis Canada, 2011) at p. HCP 5.

McNaughton, E. L. and Sabet, P. A Guide to the Ontario Consumer Protection Act, 2008 edition ( Markham, Ont: LexisNexis, 2007). Sullivan, R. Statutory

Interpretation (Toronto, Ontario: Irwin Law Inc., 1997). Waddams, S.M. The Law of Contracts, Fourth Edition (Toronto: Canada Law Book Inc., 1999). Exhibits Entered: 37 exhibits were entered.

Table of Contents Page No. 1. INTRODUCTION (

A) Position Of The Parties. 2. THE CHARGES (

A) Categories Of Charges. 3. BACKGROUND (

a) Summary of the proceedings. (

b) The Defendants.

(1) The defendant Ivan Valovic,

(2) The corporate defendant Ivan’s Electric Ltd.

(3) The defendant Peter Valovic.

(4) The corporate defendant Insight Electric Inc. (

c) The Consumers Who Filed Complaints Against The Defendants. (

d) The Nature Of The Consumers’ Complaints To The Ministry Of Government And Consumer Services. (

e) How Are The Defendants’ Fees or Prices For Their Electrical Services Determined? (

f) Fees That The Electrical Safety Authority Charges For Electrical Inspections Are Passed Onto The Consumer. (

g) Ivan Valovic’s Master Electrician’s Licence Had Lapsed On June 18, 2010, And Would Not Be Renewed By The ESA Unless He Rewrote and Passed The Master Electrician Examination. (

h) Ivan’s Electric Ltd. Could Not Operate As An Electrical Contractor Without A Licenced Master Electrician. (

i) After ESA Informs Ivan Valovic On April 16, 2012, That Ivan's Electric Ltd. Had To Immediately Stop Operating, Ivan Valovic Goes To Work For His Son’s Company, Insight Electric Ltd. (

j) Ivan Valovic And Ivan’s Electric Ltd. Began Passing On Jobs To Insight Electric Ltd. After The ESA Informed Ivan Valovic That Ivan's Electric Ltd. Had To Immediately Stop Operating.

(

k) Which of the 11 Consumers Had Entered Into Agreements With The Defendants After April 16, 2012, The Date When Ivan Valovic Had Been Informed By The ESA That Ivan's Electric Ltd. Had to Immediately Stop Operating? (

l) Ivan Valovic Continued To Use The Ivan's Electric Ltd. Red Van At Consumers’ Homes After ESA Had Told Ivan Valovic on April 16, 2012, To Immediately Stop Operating Ivan's Electric Ltd. (

m) The ESA Revokes Ivan's Electric Ltd.’s Electrical Contractor’s Licence On March 14, 2013, Due To Safety Concerns. 4. ANALYSIS AND DECISION (

A) SHOULD THE CROWN’S APPLICATION UNDER S. 34 OF THE P.O.A. TO AMEND THE STATUTORY PROVISION FOR THE OFFENCE FROM 116(1)(b)(vii) to 116(1)(b)(ii) ON 6 PARTICULAR COUNTS (TOTALLING 20 CHARGES) BE GRANTED?

(1) Can the amendments be made to the 6 counts set out in two of the three informations during the defendants’ closing arguments stage of the trial?

(2) Discussion of the s. 34(4) factors. (

a) Has Any Evidence Been Adduced At Trial? (

b) What Are The Circumstances In This Case? (

c) Has The Variance, Error, Or Omission Misled Or Prejudiced The Defendants? (

i) Is there “presumed prejudice” to the defendants just because the application for the proposed amendment had been brought by the prosecution at the closing arguments stage of the trial? (ii) Would allowing the proposed amendment of substituting one statutory provision for another statutory provision actually change the offence in those 6 counts to a different offence for the defendant to defend and to make full answer and defence? (

d) Having Regard To The Merits Of The Case, Can The Proposed Amendments Be Done Without Injustice To The Defendants?

(3) Conclusion (

B) WERE THE AGREEMENTS NEGOTIATED BETWEEN THE DEFENDANTS AND THE 11 CONSUMERS “DIRECT AGREEMENTS” WITHIN THE MEANING OF THE CONSUMER PROTECTION ACT, 2002? (

a) The definition of a “direct agreement” in the CPA 2002. (

b) Public welfare legislation is to be generously interpreted in a manner that is in keeping with the purposes and objectives of the legislative scheme (

i) What is the legislative goal of the CPA 2002? (ii) There has been a paradigm shift in the merchant-consumer relationship brought about by consumer protection legislation that changes the relationship that had been based on the maxim “caveat emptor” -- let the buyer be aware, to a relationship now based on the maxim “caveat venditor” -- let the supplier be aware. (iii) Should direct agreements only be interpreted narrowly so as to apply to only door-to-door sales and not to situations where a consumer calls an electrician to attend at the consumer’s residence for a service call? (

c) Academic writers in defining a direct agreement have only provided examples of “direct agreements” which include transactions related to door-to-door sales. (

d) Bill 59 makes reference to the “direct agreement” provisions in the Consumer Protection Act, 2002 , applying to situations or transactions where the consumer calls the supplier to attend at the consumer’s residence. (

e) The agreements between the defendants and the 11 consumers are “direct agreements” within the meaning of the CPA 2002. (

C) IN RESPECT TO THE RULE IN BROWNE AND DUNN, DID THE DEFENDANTS HAVE TO PUT ANY PROPOSED CONTRADICTION TO THE CROWN WITNESSES IN CROSS-EXAMINATION BEFORE THE DEFENDANTS COULD SUGGEST THAT THE CROWN WITNESSES HAD NOT BEEN CREDIBLE IN THEIR CLOSING ARGUMENTS?

(1) Is the Rule In Browne And Dunn a legal principle or a rule of fairness in Canada?

(2) Have the testimony of the consumers been credible?

(3) Have the testimony of the defendants been credible? (

D) HAS THE PROSECUTION PROVEN BEYOND A REASONABLE DOUBT THAT THE DEFENDANTS HAVE COMMITTED THE ACTUS REUS OF THE OFFENCES THEY HAVE BEEN RESPECTIVELY CHARGED WITH?

(1) Were Ivan Valovic and Peter Valovic party to an offence committed by Ivan's Electric Ltd. and Insight Electric Inc .?

(2) The “Improper Contract” Charges. (

a) The Nature Or Contents Of The Defendants’ Written Direct Agreements That Were Provided To The Consumers.

(

i) Did the defendants’ agreements given to the 11 consumers comply with the CPA 2002 and its regulations in respect to the information that is required to be provided to consumers? (

A) What information is required to be contained in a direct agreement? (ii) Did the agreements or forms used by other electricians in the industry comply with the requirements of the CPA 2002? (iii) Did the prosecution prove the actus reus of the offence of “failing to provide a proper agreement to a consumer” beyond a reasonable doubt?

(3) The “Fail To Refund” Charges (

a) When Are The Defendants Obligated To Make A Refund To A Consumer? (

i) Are the defendants legally entitled to ask a consumer for a 30% deposit or to include a 30% cancellation fee term or condition in the direct agreement? (ii) If the defendants are required to make a refund to a consumer, what is “reasonable compensation” that the defendants can deduct from the refund amount that would have to be refunded to the consumer? (

b) Under What Situations May A Consumer Cancel A Direct Agreement? (

i) Cancelling the direct agreement during the 10-day cooling off period. (ii) Cancelling the direct agreement if the supplier fails to provide a direct agreement containing the required information prescribed under s. 42. (iii) Cancelling the direct agreement when the supplier has engaged in an unfair practice. (

c) Was Proper Notice By The Consumers Requesting A Refund Given To The Defendants? (

d) Did the prosecution prove beyond a reasonable doubt the actus reus of the offence of failing to provide a refund to a consumer within 15 days of receiving notification?

(4) The “Unfair Practice” Charges (

a) What is an unfair practice within the meaning of the CPA 2002? (

b) What were the false, misleading or deceptive representations made by the defendants to the consumers? (

c) The prosecution does not have to prove that the consumers had relied on the defendants’ false, misleading or deceptive representations before entering into the agreement with the defendants in order to establish that there has been an unfair practice . (

d) Did the prosecution prove the actus reus of the offence beyond a reasonable doubt that the defendants respectively engaged in an unfair practice by making false, misleading or deceptive representations to the consumers? (

i) Is there evidence that the defendants have grossly over-charged the consumers so as to make it an unfair practice? (

A) Prices of what Nigel Avery, a master electrician, would charge for his services. (

B) Opinion of Joe Peragine, an ESA inspector, on how much an electrical job should cost. (ii) By analogy, is the omission of informing the consumers that they are buying a $10 hamburger instead of a $3 hamburger an unfair practice? (iii) Is the 30% cancellation fee imposed on the consumers in the agreement an unfair practice? (

A) Is the 30% cancellation fee legally permitted to be a condition in a direct agreement under the CPA 2002? (iv) When a consumer calls Ivan's Electric Ltd.’s telephone number to hire an electrician and the defendants omit to inform the consumer that Ivan's Electric Ltd. is no longer operating and then Insight Electric Inc. arrives at the consumer’s residence to do the job be a n unfair practice? (

A) Was there anything improper about Ivan Valovic and Ivan’s Electric Ltd. passing on jobs to Insight Electric Inc.? (

B) Is the failure to disclose that Ivan's Electric Ltd. is no longer operating and that Ivan's Electric Ltd. or Ivan Valovic had passed the job to Insight Electric Inc., who then arrives at the consumer’s residence to do the job, a material fact that has to be disclosed to the consumer during the initial telephone call made by the consumer to Ivan's Electric Ltd. or Ivan Valovic to provide the consumer a service? (

C) Were the consumers confused about who they had called to be their electricians when Insight Electric Inc. appeared at the consumer’s residence instead of Ivan's Electric Ltd. who had been called by the consumers to provide the service? (

v) Is omitting to inform the consumer during the initial telephone call what the defendants’ rates are for emergency service calls or that they will charge the consumer a service charge for attending at the consumer’s residence an unfair practice? (vi) Did the defendants commit an unfair practice by not providing a detailed breakdown of the work involved and the cost of the labour and parts in their agreements with the consumers?

(

E) HAVE THE DEFENDANTS RESPECTIVELY ESTABLISHED THE DEFENCE OF DUE DILIGENCE ON A BALANCE OF PROBABILITIES?

(1) Does having a reasonable mistake of law establish a due diligence defence for a strict liability offence?

(2) Due diligence for the improper contract charges.

(3) Due diligence for the fail to refund charges.

(4) Due diligence for the unfair practice charges.

(5) Due diligence for the charges against Ivan Valovic and Peter Valovic in their capacity as directors of their respective corporations.

(6) Can the defendants rely on the ESA’s missteps or confusion caused by the ESA in dealing with the renewal of Ivan Valovic’s Master Electrician’s Licence or Ivan's Electric Ltd. electrical contractor’s licence as a due diligence defence? (

F) DEFENDANTS’ CHARGES IN RESPECT TO EACH OF THE 11 CONSUMERS (

i) Denise Herold (ii) Gladys Canadas (iii) Catherine Telford (iv) Peter Christensen (

v) Terry Bardeau (vi) Boris Wolchak (vii) Eva Patterson (viii) Nigel Lundie (ix) Sandra Castator (

x) Marjorie Riley (xi) Zaven Tahtadjian 5. DISPOSITION 1. INTRODUCTION [ 1 ] During the great ice storm that struck southern Ontario in late December of 2013, hundreds of thousands of homes were left without power and electricity for many days. [1] The inclement weather had caused many downed power lines, and for the people whose homes were without heat, the temperatures outside were frigidly cold and below freezing.

During this crisis, some politicians even publicly pleaded for suppliers of goods and services not to gouge or take advantage of people who were vulnerable and severely affected by the ice storm. [2] However, not all heeded that request. For likely reasons of greed and profit, some did take advantage of the misfortune of others and from the chaos caused by the ice storm to gouge their customers and to line their pockets. [ 2 ] At this time, there are no “price gouging” laws in Ontario to protect consumers during times of declared emergencies.

As such, suppliers of goods and services are not prohibited from charging any amount they wish during a natural disaster or other emergency.

However, supporters of price gouging laws argue that taking advantage of people during a disaster or crisis by increasing prices excessively or exorbitantly is morally wrong and that those guilty of the practice should face criminal or quasi-criminal charges, while those opposing such laws maintain that in circumstances when consumers are willing to pay the price asked for certain goods or services, then the supplier cannot be blamed. [ 3 ] On the other hand, even during times when a declared public state of emergency or disaster does not exist, suppliers of services and goods in Ontario may potentially face prosecution in lesser circumstances of public crisis under the Consumer Protection Act, 2002 , S.O. 2002, c. 30, Sched.

A (“ CPA 2002 ”), for committing an “unfair practice” under s. 15(2)(

b) when they make an unconscionable representation in which the price for goods or services would “grossly exceed” the price at which similar goods or services are readily available to like consumers. This is what many consumers in this regulatory prosecution contend had occurred to them when they hired the defendants, Ivan's Electric Ltd., Ivan Valovic, Insight Electric Inc., and Peter Valovic, as electrical contractors and electricians to attend their residences to find and fix their electrical problems.

For the most part, these consumers had complained to the Ministry of Government and Consumer Services that the defendants had excessively overcharged them when compared to what other electricians would have charged them. [ 4 ] Coincidentally, two of the consumers who had filed complaints against the defendants had indeed lost power to their homes as a

result of that ice storm that had occurred in late December of 2013.

These two consumers had also been adamant that they had been taken advantage of by the defendants in the circumstances and had believed that they had excessively overpaid the defendants to fix and restore electrical service to their homes. [ 5 ] For this regulatory prosecution, 12 consumers had filed complaints about the defendants with the Ministry after the defendants had completed electrical work at the consumers’ residences for which the defendants had been called in to do, or in two instances when consumers had paid substantial deposits to the defendants for future electrical work to be done by the defendants, but then subsequently cancelled the jobs and had asked for a return of their deposits.

However, these two consumers did not receive a full refund from the defendants after they had cancelled the jobs, which then led to them complaining to the Ministry. As well, some of the consumers who had their electrical work completed by the defendants had also demanded a refund after realizing or believing that they had grossly overpaid the defendants for the work that they had hired the defendants to do.

The consumers had also complained to the Ministry about having other concerns about the defendants, including that Ivan's Electric Ltd. or Ivan Valovic not being properly licensed to do electrical work; that the defendants had charged them for new parts and materials but had instead provided them with used parts or materials; that the defendants had charged them for electrical inspections by the Electrical Safety Authority (“ESA”) that were never carried out; that payment had been taken upfront by the defendants and charged to their credit cards before the work had even commenced; and that the defendants had misled the consumers about the seriousness of the consequences or danger of the electrical problem at their residences in order to get the job or about the availability of parts or materials.

These events and transactions between the consumers and the defendants had occurred during a period covering about 32 months between May 27, 2011 and January 15, 2014. [ 6 ] After investigating these consumer complaints, the Ministry of Government and Consumer Services then charged Ivan Valovic, who had been licensed as a master electrician; Ivan Valovic’s company named “Ivan's Electric Ltd.”; Ivan Valovic’s son, Peter Valovic, who also is a licenced master electrician; and Peter Valovic’s company named “Insight Electric Inc.”, with committing 103 offences respectively under the CPA 2002 .

In addition, Ivan Valovic, is the President and director of Ivan's Electric Ltd. while Peter Valovic is the President and director of Insight Electric Inc. [ 7 ] The 103 charges laid against the four defendants are set out in 46 counts that are contained in three separate informations, which were sworn respectively on February 25, 2013 ( #5731 ), on November 4, 2013 ( #8091 ), and on March 6, 2014 ( #5740 ).

Furthermore, these 103 charges can be grouped into the following types of offences: (1) there are 13 separate counts (totaling 36 charges) for the offence of failing to deliver to a consumer a direct agreement containing the information required by s. 35(1) of the O.

Reg. 17/05 , contrary to s. 42 of the CPA 2002, and, thereby committing an offence under s. 116(2) of the CPA 2002; (2) there are 8 separate counts (totaling 8 charges) for the offence of failing to take reasonable care, as a director of the corporation, in preventing the corporation from failing to deliver to a consumer a direct agreement containing the information required by s. 35(1) of the O.

Reg. 17/05 , contrary to s. 42 of the CPA 2002, and thereby committed an offence under s. 116(3) of the CPA 2002; (3) there are 8 separate counts (totaling 26 charges) for the offence of failing to provide a refund to a consumer within 15 days after the date the said consumer gave notice of cancellation, contrary to s. 96(1)(

a) of CPA 2002, thereby committing an offence under s. 116(1) (b)(viii) of CPA 2002; (4) there are 6 separate counts (totaling 6 charges) for the offence of failing to take reasonable care, as a director of the corporation, in preventing the corporation from failing to provide a refund to a consumer within 15 days after the date the said consumer gave notice of cancellation, contrary to s. 96(1)(

a) of the CPA 2002, and thereby, committed an offence under s. 116(3) of CPA 2002; (5) there are 7 separate counts (totaling 23 charges) for the offence of engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer, contrary to s. 17(1) of the CPA 2002, thereby committing an offence under s. 116(1)(b)(vii) [ or 116(1)(b)(ii) if the proposed amendment is granted ] of the CPA 2002; and (6) there are 4 separate counts (totaling 4 charges) for the offence of failing to take reasonable care to prevent the corporation, as a director of the corporation, from engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer, contrary to s. 17(1) of the CPA 2002, thereby committing an offence under s. 116(3) of the CPA 2002. [ 8 ] And, of the 12 consumers who had filed complaints against the defendants that led to the 103 charges at bar, only 11 of the 12 consumers had appeared at trial to provide testimony.

Also, during the prosecution’s part of the trial and after it was evident that some of

the consumers had not provided any evidence in respect to particular charges, the prosecution had asked that 14 of the 103 charges laid against the defendants be dismissed, since there had been no evidence adduced that the defendants had committed those specific offences. Therefore, in respect to Information #5731, counts #5, #6, and #10 totaling 6 charges were dismissed; in respect to Information #8091, counts #3 and #4 totaling 4 charges were dismissed; and in respect to Information #5740, count #3 totaling 4 charges was dismissed. [ 9 ] As a result, only 89 charges in 40 separate counts of the original 103 charges in 46 counts remain for consideration. (

A) The Position of The Parties [ 10 ] The prosecution contends that for the remaining 89 charges they have met their burden in proving beyond a reasonable doubt that all the defendants have committed their respective charges of the 89 charges and that the defendants have failed to prove on a balance of probabilities a defence of due diligence, which would prevent them from being convicted of committing those 89 offences.

Accordingly, the prosecution submits that for the 89 charges the defendants have been respectively charged with committing, that they should have convictions entered against them respectively for committing those offences. [ 11 ] However, for the “engaging in an unfair practice” charges the prosecution is not relying on the consumers’ complaints and testimony that the defendants had “excessively overcharged” for their work and services as the basis for committing that offence, but contends that the defendants had still engaged in unfair practices in other ways towards the consumers.

The prosecution submits that the defendants had engaged in the following false, misleading, or deceptive representations in respect to the 11 consumers: (1) by including a 30% cancellation fee term in the written agreements with the consumers, which the prosecution submits is not legally permissible in a “direct agreement” under the CPA 2002 ; (2) by also taking a 30% deposit from a consumer and then when the consumer cancels the direct agreement to refuse to provide a refund and keep the deposit as the 30% cancellation fee; (3) by also promising to give the consumers a one-year warranty on parts and labour, but then did not include that promised guarantee in the written agreements entered into with the consumers; (4) by also not informing particular consumers who called Ivan's Electric Ltd. or Ivan Valovic for service that Ivan's Electric Ltd. was no longer operating and that Insight Electric Inc. would be attending to do the work; (5) by also informing the consumer, who had originally called Ivan's Electric Ltd. to do the job, that Insight Electric Inc. was doing the work when the defendants arrived at the consumer’s residence, but that the defendants’ van that would appear at the consumer’s residence would have the business name, the logo, and the telephone numbers of Ivan's Electric Ltd; (6) by also informing the consumer, who had originally called Ivan's Electric Ltd. to do the job, that Insight Electric Inc. was doing the work when the defendants arrived at the consumer’s residence, but then the consumer would be given direct agreements, proposals, or written agreements, business cards, and stickers that would contain the name, logo, telephone numbers, and electrical contractor’s licence number for Ivan's Electric Ltd.; (7) by also informing the consumer, who had originally called Ivan's Electric Ltd. to do the job, that that Insight Electric Inc. was doing the work when the defendants arrived at the consumer’s residence, but then charging the consumer’s credit card to Ivan's Electric Ltd.’s account; (8) by also not telling the consumer who had called Ivan's Electric Ltd. for service that the consumers would be charged a $180 service call charge or a $360 emergency service call charge just for the defendants to drive to the consumer’s home, or to inform the consumer that their emergency, after-hours, holidays, and week-end rates are double the regular rate of $180 an hour for each electrician that attends the consumer’s house; and

(9) by also displaying or providing the electrical contractor’s licence number for Ivan's Electric Ltd. to the consumer when the electrical contractor’s licence for Ivan's Electric Ltd. had been revoked by the ESA. [ 12 ] Now, in defending against these remaining 89 charges in the 40 separate counts, the defendants have made three distinct arguments for why they should not be found guilty beyond a reasonable doubt or be convicted of committing the remaining 89 charges. [ 13 ] First of all, the defendants submit that for 20 of the remaining 89 charges set out in 6 separate counts that pertain to the offences in respect of “engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer ”, the defendants contend that the prosecution has not adduced any evidence in respect to committing the offence set out in s. 116(1)(b)(vii) in respect to matters of “leasing” prescribed under ss. 88 and 89(1) of

Part VIII of the CPA 2002 . However, when this argument was made by the defendants during their closing argument, the prosecution immediately brought an application under s. 34 of the Provincial Offences Act , R.S.O. 1990, c. P.33 (“P.O.A.”), seeking an order to amend the statutory provision from “ section 116(1) (b)(vii)” that is stated in those 6 counts pertaining to those 20 charges (which refers to matters of “leasing” in respect to ss. 88 and 89(1) of

Part VIII of the CPA 2002 ), to the statutory provision of “section 116(1)(b)(ii)”, which the prosecution submits properly describes offences in respect to “unfair practices” mentioned under s. 17(1) of

Part III of the CPA 2002, so as to coincide with the evidence adduced at trial in respect to offences committed by the defendants related to “engaging in unfair practices by making false, misleading, or deceptive representations”.

The defendants objected to the application to amend the statutory provision for those 6 counts, arguing that it would prejudice the defendants since the proposed amendment would create a new offence and it would be unjust to grant the amendment since the limitation period for laying the charge has already expired. [ 14 ] Ergo, if the prosecution’s application under s. 34 of the P.O.A. is not granted to amend those 6 counts pertaining to those 20 charges from “ section 116(1) (b)(vii)” to “ section 116(1) (b)(ii)”, then acquittals will have to be necessarily entered for the defendants on those 6 specific counts, since there has been no evidence adduced by the prosecution in the trial about matters of “leasing” in respect to ss. 88 and 89(1) of

Part VIII of the CPA 2002 in respect to any of the consumers . [ 15 ] For their second argument, the defendants submit that in deciding whether 62 of the remaining 89 charges that are set out in 29 separate counts have been respectively committed by the defendants beyond a reasonable doubt, it will necessarily be contingent on whether the agreements entered into between the 11 consumers and the defendants are “direct agreements” within the meaning of the CPA 2002.

Those 62 charges are for the offences in respect to the 42 charges associated with the offences of “ failing to deliver to a consumer a direct agreement containing the information required by s. 35(1) ” of the O. Reg. 17/05 , which is contrary to s. 42 of the CPA 2002 and for the 20 charges associated with the offences of “ failing to provide a refund to a consumer within 15 days after the date the said consumer gave notice of cancellation” which is contrary to s. 96(1)(

a) of the CPA 2002 . [ 16 ] For their argument that the agreements with the 11 consumers are not “direct agreements”, the defendants contend that the “direct agreement” provisions of the CPA 2002 , such as the 10-day cooling-off period to cancel an agreement, are not meant to apply to situations, such as here, where a consumer calls an electrician or a plumber, for example, to attend at the consumer’s house for a service call.

Instead, the defendants contend that the “direct agreement” provisions of the CPA 2002 are only meant to apply to door-to-door salespersons who arrive at a consumer’s house unexpectedly, and then solicits, pressures, or convinces the consumer to enter into a contract to purchase a good or a service such as a water heater or a vacuum cleaner or lawn-cutting service.

Moreover, the defendants also contend that they themselves had reasonably believed that their agreements with consumers were not direct agreements for the purposes of the CPA 2002 based on their lawyer having had advised them that their agreements with consumers for electrical work were not “direct agreements”, since the defendants had not solicited the consumer as door-to-door salespeople, but had been instead solicited by the consumer to attend the consumer’s house to provide goods and services.

Furthermore, the defendants also contend that the Review Panel of the Electrical Safety Authority (“the ESA”), the governing body of electrical contractors and master electricians in Ontario, had in a hearing involving the defendants had found logic in their lawyer’s argument that direct agreements do not apply to situations in which a consumer calls an electrician to attend at the consumer’s house to provide their services. [ 17 ] On the other hand, the prosecution refutes the defendant’s argument that the defendants’ agreements with consumers are not direct agreements and submits that the definition of a “direct agreement” under s. 20(1) of the CPA 2002 , which defines a direct agreement as “ a consumer agreement that is negotiated or concluded in person at a place other than, at the supplier’s place of business, or at a market place, an auction, trade fair, agricultural fair or exhibition ”, is to be interpreted broadly so that it would include the situation where a consumer calls a supplier to attend at the consumer’s house to provide goods and services, and therefore, would make the defendants’ agreements direct agreements, since the agreements between the defendants and the consumers in this proceeding had not been signed at the supplier’s place of business or at a trade show. [ 18 ] Consequently, if the agreements between the consumers and the defendants are not found to be “direct agreements” within the meaning of the CPA 2002, then the provisions in the CPA 2002 and its regulations governing direct agreements, such as the requirement to provide specific information in the agreement that is provided to the consumer; the 10-day cooling off period which permits a

consumer to cancel the agreement for any reason during that 10-day period or the consumer’s right to cancel the agreement within one year of signing the agreement if the agreement does not contain the required information; and the obligation of the supplier to provide a refund to the consumer any payment made under the agreement within 15 days of being notified the agreement has been cancelled, would not apply to those particular agreements with the 11 consumers, and acquittals will also necessarily have to be entered for the respective defendants for those particular 62 charges associated with the offences of “failing to provide a proper agreement to a consumer” and the offences of “failing to provide a refund to a consumer within 15 days of being notified of the cancellation”. [ 19 ] And, for their third argument for the dismissal of the remaining 89 charges, the defendants argue in the alternative, that if the prosecution’s application to amend the statutory provision in those 6 counts pertaining to those 20 charges from “section 116(1)(b)(vii)” to “section 116(1)(b)(ii)” is granted and if the agreements entered into between the 11 consumers and the defendants are found to be “direct agreements” within the meaning of the of the CPA 2002 in respect to the 29 counts containing 62 charges, and the prosecution has proven beyond a reasonable doubt the actus reus of the offences for the remaining 89 charges, then the defendants contend that they have nevertheless proven on a balance of probabilities that they had acted with due diligence and had taken all reasonable care or steps in preventing or avoiding committing those remaining 89 charges. [ 20 ] Furthermore, the trial of the 103 charges had commenced on October 9, 2014, and finally concluded on November 2, 2016.

The trial had taken 22 separate trial days to complete and had involved the testimony of 15 witnesses. Thirteen of the 15 witnesses had testified for the prosecution, while two witnesses, the defendants, Ivan Valovic and Peter Valovic, had testified for the defence. [ 21 ] After closing arguments and submissions were heard on October 27 and November 2, 2016, judgment was reserved and adjourned to April 4, 2017, for judgment. These therefore are the written reasons for judgment: 2.

THE CHARGES [ 22 ] The defendants, Ivan Valovic, Ivan's Electric Ltd., Peter Valovic, and Insight Electric Inc., have been jointly or individually charged with committing 103 offences set out in 46 counts in three separate informations under the CPA 2002 or under its regulations. (

A) Categories Of Charges [ 23 ] The 103 charges that were laid respectively against the defendants can be categorized into three general categories.

They may referred to as: (1) the “ improper contract” offences ; (2) the “ fail to provide a refund” offences; and (3) the “ unfair practices” offences. [ 24 ] But more particularly, the four defendants, Ivan Valovic, Ivan's Electric Ltd., Peter Valovic, and Insight Electric Inc., have been charged respectively with committing these three categories of offences in respect to particular consumers, which are the following: (1) failing to deliver to a consumer a direct agreement containing the information required by s. 35(1) of the O.

Reg. 17/05 , contrary to s. 42 of the CPA 2002, and thereby committing an offence under s. 116(2) of the CPA 2002. (2) failing to provide a refund to a consumer within 15 days after the date the said consumer gave notice of cancellation, contrary to s. 96(1)(

a) of the CPA 2002, and thereby committing an offence under s. 116(1)(b)(viii) of the CPA 2002. (3) engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer, contrary to s. 17(1) of the

CPA 2002, and thereby committing offence under s. 116(1)(b)(ii) of the CPA 2002. [ 25 ] However, for the “engaging in an unfair practice by making a false, misleading or deceptive representation” charges, there had been 7 counts of these charges set out in the 3 informations, in which the prosecution has brought an application to amend the statutory provision of the offence set out in 6 of the 7 counts from the statutory provision of “section 116(1)(b)(vii)” to the statutory provision of “section 116(1)(b)(ii)”.

For the 7 th count, the prosecution did not seek it to be amended, since the statutory provision already states “section 116(1)(b)(ii)”. [ 26 ] In addition, the defendants, Ivan Valovic and Peter Valovic, were charged in their roles or capacity as directors of their respective corporations for failing to prevent the corporate defendants, Ivan's Electric Ltd. and Insight Electric Inc., from committing two particular categories of offence in relation to particular consumers.

Ivan Valovic was charged as a director of Ivan's Electric Ltd. and Peter Valovic was charged as a director of Insight Electric Inc., for failing to prevent their respective corporate defendants from committing the offences of: (1) failing to take reasonable care to prevent the corporation from failing to deliver to a consumer a direct agreement containing the information required by s. 35(1) of O.

Reg. 17/05 , contrary to s. 42 of the CPA 2002, and thereby committed an offence under s. 116(3) of the CPA 2002; (2) failing to take reasonable care to prevent the corporation from failing to refund a consumer within 15 days after the date the said consumer gave notice of cancellation, contrary to s. 96(1)(

a) of the CPA 2002, and thereby, committed an offence under s. 116(3) of the CPA 2002. [ 27 ] Additionally, the defendant, Peter Valovic, has been charged in his role or capacity as a director of Insight Electric Inc. for committing a third type of offence, namely: (3) failing to take reasonable care to prevent the corporation from engaging in an unfair practice by making a false, misleading or deceptive representation to a consumer, contrary to s. 17(1) of the CPA 2002, and thereby, committed an offence contrary to s. 116(3) of the CPA 2002. 3.

BACKGROUND [ 28 ] Ivan Valovic and Peter Valovic are licenced journeyman electricians. Ivan Valovic is the father of Peter Valovic. Before becoming a licenced electrician, Peter Valovic apprenticed with his father and then worked for his father’s company as an electrician until he decided to start his own company. Both were also licensed by the Electrical Safety Authority (“ESA”) as master electricians. However, Ivan Valovic’s master electrician’s licence lapsed on June 18, 2010, and would not be renewed by the ESA unless Ivan Valovic rewrote and passed the master electrician examination.

Peter Valovic is still licenced as a master electrician by the ESA. They both had run their businesses as electricians through corporate entities. Ivan Valovic ran his electrician business through Ivan’s Electric Ltd. and is the owner/principal shareholder and one of the two directors of that corporation. Peter Valovic started his own company on February 24, 2010, and runs his electrician business through Insight Electric Inc. where he is the owner/principal shareholder and sole director of the corporation. Both are companies incorporated in Ontario.

Both corporations are still active, although Ivan's Electric Ltd. had its residential electrical contractor’s licence revoked by the ESA on March 14, 2013. Insight Electric Inc. still has its residential electrical contractor’s licence. [ 29 ] The defendants provide electrical installation and repair services to mainly residential customers and do not generally bid for electrical work for commercial projects. The defendants also provide emergency after-hours services, but charge a much higher hourly rate or premium for their services, usually double their regular rate of $180 an hour.

In addition, the defendants charge consumers a service call charge of $180 just to appear at the consumer’s house and a minimum of one hour labour at $180 for working in the consumer’s house, such as troubleshooting the electrical problem at the consumer’s residence.

In other words, the defendants hourly rate for after hours, statutory holidays, weekends, or for emergency work is charged to the consumer at the rate of $360 per electrician for making the service call and an additional $360 for trouble-shooting the electrical problem before any repairs or electrical work or installation is commenced. [ 30 ] To legally operate as an electrical contractor in Ontario, an electrical contractor’s licence has to be issued to that electrical

contracting business by the ESA. And, in order to obtain that electrical contractor’s licence, the electrical contracting business must have a designated licenced master electrician to supervise and be responsible for the electrical work. Furthermore, all licensed electricians who wish to obtain a master electrician’s licence for carrying out electrical work on behalf of an electrical contractor are also governed by the ESA, a body authorized by the Ontario Government to regulate, licence, and govern master electricians and electrical contractors in Ontario.

The ESA was granted administrative authority under the Safety and Consumer Statutes Administration Act, 1996 , S.O. 1996, c. 19 and the Electricity Act , 1998, S.O. 1998, c. 15, Sched. A, and by s. 1 of the Electrical Safety Authority Regulation, O. Reg. 89/99 (Electricity Act, 1998), after the ESA entered into an agreement dated March 11, 1999 with the Ontario government. The ESA commenced its mandate on April 1, 1999. Its present authority is also governed by provisions set out the General Regulation enacted under the Safety and Consumer Statutes Administration Act, 1996 , O.

Reg. 187/09 . [ 31 ] When the trial commenced on October 9, 2014, there were 48 individual counts in the three separate informations, containing 103 charges altogether. Initially, the defendants were charged individually with committing the following number of offences under the CPA 2002 or its regulations:

(1) Ivan Valovic was charged with committing 30 offences,

(2) Ivan's Electric Ltd. was charged with committing 30 offences,

(3) Peter Valovic was charged with committing 21 offences, and

(4) Insight Electric Inc. was charged with committing 22 offences. (

A) Summary Of The Proceedings [ 32 ] Information #5731 which contained 1 5 counts (27 charges) was sworn on February 25, 2013. Information #8091 which contained 28 counts (56 charges) was sworn on November 4, 2013. And, Information #5740 which contained 5 counts (20 charges) was sworn on March 6, 2014. [ 33 ] The trial of the 103 charges commenced on October 9, 2014, and after 22 separate trial dates concluded on November 2, 2016. Before arraignment, the prosecution sought to have amendments made to the three informations. The defendants consented to those amendments being made on the informations.

Moreover, additional amendments on consent were also subsequently made to the informations. Altogether, about 15 amendments had been made and consented to by the defendants. [ 34 ] There had been 15 witnesses who had testified in the trial. Thirteen of the 15 witnesses were called by the prosecution. Eleven of the 13 prosecution witnesses were the consumers who had entered into agreements with the defendants for electrical work at the consumers’ residences.

The prosecution had also called one witness who was an electrician and who had provided a cost estimate for electrical work to be done for the consumer where the defendants had already completed the electrical work. In addition, the prosecution also called an inspector with the ESA who had informed one of the consumers that the electrical work completed by the defendants could have been done at a much lower price.

In addition, both the defendants, Ivan Valovic and Peter Valovic, had testified at the trial in their own defence. [ 35 ] At the commencement of the trial there had been 12 consumers who had made complaints to the Ministry of Government and Consumer Services and who had either had worked done by the defendants or who had entered into an agreement to have future electrical work done by the defendants.

However, only 11 of the complainants appeared and testified at the trial. [ 36 ] In addition, during the prosecution’s case, the prosecution had invited the dismissal of 14 of the 103 charges, as there had been no evidence adduced during the prosecution’s case in respect to those 14 charges. As such, those 14 charges contained in 6 separate counts were then dismissed and recorded as acquittals. (

B) The Defendants

(1) The defendant Ivan Valovic

[ 37 ] The defendant, Ivan Valovic, had been 64 to 66 years old during the period that covers the 11 consumers’ dealings with the defendants between May 27, 2011 and January 15, 2014 . He had emigrated to Canada in 1968 after escaping from Czechoslovakia. In Czechoslovakia, he had trained to be an electrical mechanic and received his licence in 1965. In Canada, he was able to pass his electrician’s exams in 1975. He then obtained a master electrician’s licence in 1978. To obtain a master electrician’s licence, he said he took courses and passed exams.

He then opened his Ivan's Electric company first as a sole proprietorship and then incorporated the company as Ivan's Electric Limited in 1979. He also took advance estimating courses from George Brown College. [ 38 ] Ivan Valovic had initially worked as an electrician for the Etobicoke General Hospital, but eventually opened a sole proprietorship business in 1975 and eventually incorporated that business in 1979. His company took on both commercial and industrial jobs.

His company also employed 12 to 14 electricians on some projects during the 1980s, until a recession occurred at the end of the 1980s and the business climate changed in Canada when he had to downsize his business and lay off his employees. He also indicated that the North American Free Trade Agreement had caused this change in his business, as many manufacturing companies had moved their businesses south of the border.

He then decided to switch his company’s focus and decided that it would specialize in residential electrical work and in providing 24-hour emergency services where he would be available at all times of the day, as well as being available on weekends and on holidays. To obtain work and customers, he bought large ads in the Yellow Pages advertising that his company provided 24-hour emergency services. Ivan's Electric Ltd. became one of the largest advertisers of electrical services in the Yellow Pages.

In addition, Ivan's Electric Ltd. through his daughter’s urging and assistance, also began an internet advertising campaign with the Yellow Pages. [ 39 ] Ivan Valovic further contends that many of the consumer complaints had been the result of misinformation that the consumers had received about him not being a licenced electrician. Ivan Valovic testified that at all material times and when he had dealt with and done electrical work for the 11 consumers he had always been a licensed electrician.

However, since Ivan Valovic’s master electrician’s licence had lapsed or expired on June 18, 2010, the ESA would not renew Ivan Valovic’s master electrician’s licence until he rewrote and passed the master electrician examination. Even though his master electrician’s licence had expired, Ivan Valovic could still do work as a licenced electrician. [ 40 ] Subsequently, consumers started to complain to the ESA about their dealings with him and his company, Ivan's Electric Ltd.

Ivan Valovic also testified that in his 30 some years as an electrician he had only received 3 or 4 complaints. [ 41 ] Ivan Valovic also testified that he is not computer literate and does not use a computer in his business and generally writes out everything that he provides to his customers.

(2) The corporate defendant, Ivan’s Electric Ltd. [ 42 ] The corporate defendant, Ivan’s Electric Limited was incorporated as an Ontario corporation on June 18, 1979. Its registered office address is 44 Pearson Road in Brampton, Ontario. It is also the corporation’s principal place of business. Ivan Valovic said he is a shareholder in Ivan’s Electric Ltd. and has 55% of the corporation’s shares while his wife has 45% of the corporation’s shares.

He is also listed as one of its two directors and its President and Secretary, since its inception. [ 43 ] In addition, Ivan’s Electric Limited had been licensed by the ESA as a residential electrical contractor until it’s electrical contractor’s licence had been revoked by the ESA on March 14, 2013, due to it not having a licenced master electrician, since Ivan Valovic’s master electrician’s licence had lapsed on June 18, 2010. [ 44 ] In addition, Ivan Valovic testified that Ivan's Electric Ltd. still exists but is now dormant since the ESA had revoked its residential electrical contractor’s licence.

(3) The defendant Peter Valovic [ 45 ] The defendant, Peter Valovic, was 30 to 32 years old during the period that covers the 11 consumers’ dealings with the defendants between May 27, 2011 and January 15, 2014 . He is the son of Ivan Valovic and had apprenticed as an electrician under his father. To become a licenced electrician in Ontario, he started his apprenticeship with his father’s company, Ivan's Electric Ltd. After completing his five-year apprenticeship and writing the licensing exams, Peter Valovic received his electrician’s licence in 2005.

He then took further courses for a master electrician’s licence, wrote the requisite licensing exams, and received his master electrician’s licence in

2008. He also said he had received some instruction in his master electrician course on the Consumer Protection Act, 2002 . [ 46 ] After becoming a licenced electrician in 2005, Peter Valovic had continued working for his father’s company until he started his own electrical contractor’s business, named Insight Electric Inc., on February 24, 2010.

However, after Ivan Valovic’s master electrician’s licence had elapsed and after Ivan Valovic had been informed by someone from the ESA that Ivan's Electric Ltd. had to immediately stop operating on April 16, 2012, Ivan Valovic and Ivan's Electric Ltd. began passing jobs to Peter Valovic’s company, Insight Electric Inc. and Ivan Valovic went to work for Insight Electric Inc. sometime after April 16, 2012. [ 47 ] Peter Valovic also testified that he participates in chat rooms for electricians and discusses issues that arise in the industry.

He also testified that he had adopted to use the same forms in running his business that had been used by his father, since he said that his father’s forms were the best of the forms from what forms that he had observed that other electricians would use in their electrician businesses.

(4) The corporate defendant Insight Electric Inc. [ 48 ] The corporate defendant, Insight Electric Inc., was incorporated as an Ontario corporation on February 24, 2010. Its registered corporate address is 44 Pearson Road, in Brampton, Ontario. However, its principal place of business is presently at 22 Mercer Drive in Brampton, Ontario. Peter Valovic is the principal shareholder of Insight Electric Inc. He is also listed as its sole director and its President and Secretary since the corporation’s inception on February 24, 2010. (

C) The Consumers Who Filed Complaints Against The Defendants [ 49 ] Eleven of the twelve consumers who had made complaints against the defendants testified at the trial about their respective dealings with the defendants. The 11 consumers who testified in the trial are the following, with the date or the range of the dates covering the period of when the alleged offences had occurred in respect to that consumer:

(1) Denise Herold , from June 12, 2011 to June 29, 2011.

(2) Gladys Canadas , from September 19, 2011 to October 12, 2011.

(3) Catherine Telford , from December 8, 2011 to January 6, 2012.

(4) Peter Christensen , from June 1, 2012 to October 14, 2012.

(5) Terry Bardeau , on or about December 16, 2012.

(6) Boris Wolchak , from December 21, 2012 to February 8, 2013.

(7) Sandra Castator , from January 14, 2013 to February 15, 2013.

(8) Marjorie Riley , from January 31, 2013 to February 26, 2013.

(9) Zaven Tahtadjian , from April 16, 2013 to May 3, 2013.

(10) Eva Patterson , from December 26, 2013 to January 15, 2014 (as a result of the ice storm).

(11) Nigel Lundie , on or about December 27, 2013 (as a result of the ice storm). [ 50 ] A 12 th complainant, Anthony Collin, did not appear in court to testify and the 4 charges in respect to that consumer set out in counts #5 and #6 in Information #5731 were then dismissed. [ 51 ] Ergo, the dealings and transactions between the 11 consumers and the defendants and the alleged offences had occurred between June 12, 2011 and January 15, 2014. [ 52 ] Furthermore, Ivan Valovic’s master electrician’s licence had expired on June 18, 2010, while Ivan's Electric Ltd. electrical contractor’s licence had been revoked by the ESA as of March 14, 2013. [ 53 ] Moreover, the electrical work contracted to be done between the 11 consumers and the defendants had been completed for 9 of the 11 consumers, while for two of the consumers, Denise Herold and Boris Wolchak, they had entered into an agreement for electrical work to be done in the future, but had not been completed since the two consumers had notified the defendants that they were cancelling the contracted work with the defendants and had demanded the return of the deposits that they had paid to the defendants.

As part of their agreements with the defendants, Herold and Wolchak had paid deposits to the defendants of approximately 30% of the value of the contracted electrical work to be done by the defendants, but did not receive any refund of their deposits from the defendants for a long period of time after the consumers had asked the defendants for a refund of their deposits. Eventually, the defendants provided refunds to those two consumers, but not for the full amount that the two consumers had paid to the defendants. (

D) The Nature Of The Consumers’ Complaints to the Ministry of Government and Consumer Services [ 54 ] For these 11 consumers, they had filed complaints with the Ministry of Government and Consumer Services because they had for the most part believed that the defendants had excessively overcharged them as compared to what other electricians would have charged and that some of them had demanded that the defendants return back part of the consumer’s payment that had been paid to the defendants.

As well, some of the other complaints about the defendants that were made to the Ministry included the belief that Ivan Valovic was not a licenced electrician; that the defendants had failed to refund to some of the consumers the deposits that had been paid to the defendants for agreed upon electrical work after the work had been cancelled by the consumers and a request had been made to the defendants for the return of their deposits; that the defendants had installed used parts or materials when the defendants had charged the consumers for new parts or materials; and that the defendants had exaggerated the seriousness of the electrical problem and the consequences of the hazard and danger to the consumer so that the defendants would be hired to do the work. (

E) How Are The Defendants’ Fees Or Prices For Their Electrical Services Determined? [ 55 ] Ivan Valovic testified that in order to survive competitively as an electrical contractor, the fees or prices he would charge consumers would have to take into account his advertising costs, his insurance, his costs to run his van, and the expenses associated with running his electrical contractor’s business, otherwise his business would not survive.

He also said that his prices could not be too high or he would not get any jobs. [ 56 ] Furthermore, he said he calculates into his proposals his travel time to and back for the job, the number of persons and hours required to do the job, the cost of minor parts, the cost of ESA inspections, and the cost of wiring and other supplies in his proposal.

He also said he charges the consumers a flat fee and does not charge more if it takes longer to do the job or if the ESA inspection fee is more than he had estimated. [ 57 ] Ivan Valovic also said that he does not list every screw or small part on his proposals because it would take too long to write up and that he would then have to charge that extra time to the consumer to prepare a full parts list on his proposal provided to the consumer.

[ 58 ] However, for unforeseen problems that arise and require additional work and materials that the original agreement did not account for, then Ivan Valovic said that he would inform the consumer about the need to do this additional work, or to get additional parts or materials, and then prepare a second or even a third proposal and present it to the consumer to accept or reject. [ 59 ] The defendants also contend that their pricing scheme is not unlike the pricing scheme utilized by the ESA and the fees that the ESA charges for electrical inspections.

In particular, the ESA charges more for inspections conducted during holidays, weekends, and for after hours, as well as for same day and for emergency service, that is not unlike how the defendants would charge higher rates for work that is required to be done outside the normal working hours from Monday to Friday. And, for after hours, statutory holidays, weekends, or for emergency work, the defendants said they would charge double their normal hourly rate.

In addition, when a consumer informs the defendants that it is emergency work that requires the defendants to attend right away, then the emergency rate would apply even if it occurs during regular or normal working hours from Monday to Friday, since the defendants would have to drop everything to accommodate the consumer’s emergency.

Moreover, the defendants would charge a consumer the emergency rate if the consumer says it is an emergency or when the work is required to be done after hours, or on holidays, or on weekends. [ 60 ] For example, the defendants would charge double their normal rates of $180 an hour for each electrician for emergency work and for work to be done on holidays, after hours, and on weekends.

So for emergency work, the defendants would charge the consumer $360 per hour. [ 61 ] In addition, the defendants charge the consumer a service call charge of $180 just for the defendants to appear at the consumer’s house, which the defendants explain covers the time and gas to drive to a consumer’s house, since the defendants service the Greater Toronto Area and it could take an hour in rush hour traffic to get to the consumer’s house as well as the time to get back home, which also includes using a tank of gas to go there and back.

Then after arriving at the consumer’s dwelling, the defendants said that they would charge the consumer a minimum of 1 hour to do any type of work at the consumer’s house. Hence, to just troubleshoot and prepare a “proposal” for the projected work to be provided to the consumer, the defendants would charge the consumer $360, which would comprise $180 for the service call charge and another $180 for troubleshooting the problem. (

F) Fees That The Electrical Safety Authority Charges For Electrical Inspections Are Passed Onto The Consumer. [ 62 ] The defendants contend that the fees for ESA inspections are not unlike what the defendants would charge a consumer for an emergency or for working after-hours, or on holidays and weekends. In addition, all electricians when preparing quotes or estimates have to include these ESA inspections fees in calculating what it would cost the consumer to do the job. For example, from the ESA Fee

Schedule located at pp. 76 to 106 in the Joint Book of Documents, s. 2.11 of the Fee

Schedule indicates that the ESA charge for a “scheduled” inspection that would have to be done outside the normal working hours from Monday to Friday, would be a fee of $199 per hour or fraction thereof (at a minimum of 2 hours) up to a maximum of $597 (for the first 4 hours) plus $149 per hour or fraction thereof in addition to the fee payable for the inspection service. However, for an “unscheduled” inspection outside normal working hours, the ESA charges $597 for the first 4 hours plus $149 per hour or fraction thereof in addition to the fee payable for the inspection service.

Therefore, if an emergency inspection (unscheduled) is required after-hours, then the ESA inspection fee would be $597 (not including HST) in addition to the fee payable for the inspection service, even if the inspection only took 10 to 15 minutes. [ 63 ] An example of that $597 fee that had been charged for an emergency unscheduled ESA inspection can be seen in what the ESA had actually charged Insight Electric Inc. in respect to electrical work done for the consumer , Zaven Tahtadjian, where the electrical inspection had been conducted by ESA inspector Joe Peragine in the evening of April 16, 2013, at about 9:30 p.m. which had only lasted about 15 to 20 minutes (see p. 144 of the Joint Book of Documents). (

G) Ivan Valovic’s Master Electrician’s Licence Had Lapsed On June 18, 2010, And Would Not Be Renewed By The ESA Unless He Rewrote And Passed The Master Electrician Examination. [ 64 ] To renew his master electrician’s licence, Ivan Valovic said he had been informed by the ESA to submit a completed form and the annual fees to the ESA. However, Ivan Valovic said that he could only submit the renewal form if the ESA actually sent him the renewal form.

However, Ivan Valovic contends that the ESA had failed to send him the renewal forms prior to his master electrician’s licence expiring, despite his many telephone calls and efforts to obtain the renewal forms or to have the ESA sent him the renewal forms. [ 65 ] Furthermore, Ivan Valovic said that his master electrician’s licence had been due to expire on June 18, 2010. He also said that the master electrician’s licence could be renewed every two years or renewed annually.

He also said that usually the ESA would send out the renewal application forms in April or May, two months prior to his master electrician’s licence expiring. However, he said that since he

had not received the application forms for renewing his master electrician’s licence, he had called the ESA licensing department on June 16 or 17, 2010, and left a message inquiring about obtaining the application forms for renewing his master electrician’s licence. He also said that a female person from the ESA called him on June 17 and told him that they had sent the application forms by fax to him, but he explicitly stated that he did not actually get the forms.

He then said that he had called the ESA again at the end of June in 2010 requesting the renewal forms, but again he did not receive the renewal forms from the ESA. [ 66 ] Then Ivan Valovic testified that he had received a letter dated July 22, 2010, from the ESA (see Exhibit #34), in which the ESA notified him that his master electrician’s licence had expired, but that he could still renew his licence if he did so within one year with a late fee if the licence had been expired for more than 14 days, but that if he did not renew his licence within the one year, then any application submitted after one year would be treated by the ESA as a new application.

He also said that he had noticed a contradiction in the letter, which had stated that the date of expiry of his master electrician’s licence was on June 18, 2011, that would have been still nearly a year away.

However, Ivan Valovic said that the ESA had referred to that contradiction as an error caused by a computer glitch. [ 67 ] In addition, Ivan Valovic said that he had been aware that he had a grace period of one year to renew his master electrician’s licence, and that normally, he would have had to simply just pay a penalty to renew his licence after it had expired. [ 68 ] Moreover, Ivan Valovic said he had continued to call the ESA about obtaining the renewal forms for his master electrician’s licence, and it was not until March of 2012 that a woman from the ESA licencing department had informed him over the telephone that because his master electrician’s licence had lapsed in 2010, that he would only be issued a master electrician’s licence if he rewrote the exams required for obtaining a master electrician’s licence, even though he had been a licenced master electrician for 35 years. [ 69 ] On the other hand, Ivan Valovic said that he did get renewal forms from the ESA in the mail, but that they had been for renewing Ivan's Electric Ltd.’s electrical contractor’s licence. (

H) Ivan’s Electric Ltd. Could Not Operate As An Electrical Contractor Without A Licenced Master Electrician. [ 70 ] The ESA had issued an electrical contractor’s licence to Ivan's Electric Ltd. to carry on business in Ontario as a “licenced electrical contractor” from July 1, 2006 to June 18, 2012 (see Ex. #24).

But once Ivan Valovic’s master electrician’s licence had lapsed on June 18, 2010, then Ivan's Electric Ltd. would be without a master electrician. [ 71 ] But more importantly, Ivan Valovic said that if he could not renew his master electrician’s licence, then his company Ivan's Electric Ltd. would not be allowed to operate as a licenced residential electrical contractor in Ontario without employing or having a licenced master electrician.

However, when he submitted the renewal forms and the renewal fees for Ivan's Electric Ltd.’s electrical contractor’s licence on or about August 5, 2010, he said that the ESA had renewed the licence even though it did not have a master electrician.

Moreover, a Notice of Expired Licence sent to Ivan's Electric Ltd. dated May 15, 2015, indicates that Ivan's Electric Ltd.’s electrical contractor’s licence had expired on May 14, 2015 (see Exhibit #35). [ 72 ] However, Ivan Valovic said the ESA had informed him that the renewal of Ivan's Electric Ltd.’s electrical contractor’s licence had been done in error. [ 73 ] In addition, the defendants submit that the ESA had continued to inspect the electrical work of Ivan's Electric Ltd. and still continued to issue permits in Ivan's Electric Ltd.’s name in 2010, 2011, and 2012, even after Ivan Valovic’s master electrician’s licence had expired on June 18, 2010, and Ivan's Electric Ltd. had been without a licenced master electrician. (

I) After ESA Informs Ivan Valovic On April 16, 2012, That Ivan's Electric Ltd. Had To Immediately Stop Operating, Ivan Valovic Goes To Work For His Son’s Company, Insight Electric Ltd. [ 74 ] On April 2, 2012, Angela Jackson, the Statutory Director of the ESA, issued a Notice of Proposal to Revoke Ivan's Electric Ltd.’s electrical contractor’s licence for safety concerns since it did not have a licenced master electrician (see Exhibit #26) , but the revocation of the licence would be automatically stayed if an appeal was filed within 15 days of receipt of the Notice of the Proposal.

However, Ivan Valovic said that Patience Cathcart from the ESA had called him and informed him on April 16, 2012, that his company, Ivan's Electric Ltd., had to immediately stop operating as an electrical contractor in Ontario. Although Ivan Valovic testified that Ivan's Electric Ltd. did not have to stop operating since there would be an automatic stay of the revocation of the licence while the Director’s Proposal to revoke

the electrical contractor’s licence was winding its way through the appeal process, including a further appeal to the Ontario Divisional Court. However, because Patience Cathcart from the ESA had told him that Ivan's Electric Ltd. could no longer operate as of April 16, 2012, Ivan Valovic said he was forced to go to work for his son’s company, Insight Electric Inc. shortly after that pronouncement.

In addition, Ivan Valovic said that he had asked Patience Cathcart to send him the specific legislation which would require Ivan's Electric Ltd. to stop operating immediately even before the appeal of the Notice of Proposal to Revoke the electrical contractor’s licence had been heard and decided. However, Ivan Valovic said he did not receive such information from the ESA.

He also went to the Ombudsperson, but said that the Ombudsperson was too busy to help. [ 75 ] Furthermore, Ivan Valovic said that the ESA did not inform him that his son, Peter Valovic, who is a licenced master electrician, could have been the licenced master electrician for two separate companies at the same time for a maximum period of one year. This, he said, would have allowed Ivan's Electric Ltd. to continue operating for another year without having to immediately cease operations. (

J) Ivan Valovic And Ivan’s Electric Ltd. Began Passing On Jobs To Insight Electric Ltd. After The ESA Informed Ivan Valovic That Ivan's Electric Ltd. Had To Immediately Stop Operating. [ 76 ] As a result of being told that Ivan's Electric Ltd. had to stop operating, Ivan Valovic said that after April 16, 2012, he would pass jobs he had received on the telephone for Ivan's Electric Ltd. to Insight Electric Inc.

However, this information that the job was being passed from Ivan's Electric Ltd. to Insight Electric Inc. would not be initially provided to the consumer on the initial telephone call and the consumer would only be informed when the defendants arrived at the consumer’s house. [ 77 ] When Ivan's Electric Ltd. was operating, the shirt worn by Ivan Valovic while doing work for Ivan's Electric Ltd. was red in colour while the shirt he would eventually wear while working for Insight Electric Inc. would be blue in colour.

Moreover, Insight Electric Inc. had a different designed logo, a different telephone number, and a different ESA contractor’s licence number from that of Ivan's Electric Ltd. [ 78 ] But, even though Ivan's Electric Ltd. had a different corporate logo than the one used by Ivan's Electric Ltd., the prosecution co

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