Noscitura a sociis (nos-ə-tər ay soh-shee-is) is Latin for: “it is known by its associates.”
This phrase is most often used in the context of interpreting the meaning of words in a statute, but Ontario’s Ministry of Transportation and its Registrar of Motor Vehicles employs a similar concept when assessing a company’s safety record including its Commercial Vehicle Operator’s Registration (CVOR). Therefore, CVOR holders should exercise caution about those with whom they do business.
The Deputy Registrar is concerned first and foremost with the safety of commercial vehicles operating on Ontario’s roads and in that respect it takes very seriously a carrier’s performance under the CVOR regime.
Once an operator’s CVOR has been cancelled, whether for failing to maintain a satisfactory safety record or more serious regulatory violations, it will never obtain another CVOR, and it can be extraordinarily difficult for the officers and directors of that company to obtain a CVOR for a new enterprise.
There are sound public policy reasons for this as the Registrar does not want those who have proven themselves incapable of abiding by the rules to close shop and reopen under another name.
This aspect of the CVOR regime has a far reaching element designed to prevent people from doing indirectly what they cannot do directly. The Registrar is concerned with ensuring that individuals who have not abided by the rules in the past cannot insinuate themselves back into the industry by another means.
Under the Highway Traffic Act, the Registrar may refuse to issue a CVOR to a person who is found to be related to a person who has had their CVOR cancelled or suspended in the past. The definition of “related” is expansive and the Registrar will find that an individual is related if:
- The CVOR holder and the person are members of the same family;
- Either the CVOR holder or the person is partner of the other or was a partner of the other or they have or have had partners in common;
- Either the CVOR holder or the person, directly or indirectly, controls or controlled or manages or managed the other; or
- The CVOR holder and the person have or have had common officers or directors or they are or have been controlled, directly or indirectly, by the same shareholders
There are a wide number of potential relationships that could get a CVOR holder in trouble. Related companies can and have been be found by the Registrar in a number of different scenarios such as:
- Companies that are operated separately but are owned by members of the same family;
- Companies that share facilities, equipment or dispatchers;
- Companies that transfer all or most of their equipment and employees to a different company;
- Companies that lease equipment to one another;
- The presence of previous officers, directors and shareholders of a company whose CVOR has been cancelled and are found to be acting as de facto officers of the corporation or managing aspects of the business though lacking an official position; and
- Companies that share certain employees in common such as safety and compliance personnel.
Given this array of potential pitfalls, CVOR holders should be cautious about individuals they partner with in their business and those operators with whom they have business relationships or cost-sharing agreements.
Safety rating downgrades
This issue is not limited to suspensions and cancellations but extends to the CVOR safety rating classification system. Our firm has dealt with matters in which a company holding a Satisfactory safety rating was downgraded to a Conditional safety rating until such time as a company found to be related passed a facility audit and obtained a satisfactory rating of its own.
An operator could find its safety rating dependant on the conduct of another company over which it has no control. For many carriers, their contracts with large shippers and brokers require that they maintain a Satisfactory safety rating and could find themselves held hostage to another operator’s capacity to address its deficiencies and therefore at risk of losing their customer base.
Written submissions
The Registrar casts a wide net and it will be up to the carrier to convince them that they are not related to a suspect entity or individual.
In response to a proposed change to a safety rating, an operator has the ability to make written submissions before the Registrar arrives at its final decision.
Once the relationship has been established, it may not be enough that the operator itself abides by the regulations, no matter how well they do so. A cancelled CVOR or a downgraded safety rating classification can be infectious and after an affiliation has been established, an operator may find themselves effectively unable to operate in the province due to that association.
Operators should be cautious about getting involved with industry players with questionable records or associating their business closely with a company that does not maintain the same standards of compliance.
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