ALBERTA MOTOR VEHICLE INDUSTRY COUNCIL Investigative Operations File Review August October 2014 Alberta Service Alberta Consumer Investigations Unit Special Investigations Unit TABLE OF CONTENTS EXECUTIVE SUMMARY: ..3 1.0 BACKGROUND ..5 2.0 STATEMENT OF OBJECTIVES, SCOPE AND METHODOLOGY ..6 3.0 ASSESSMENT, FINDINGS AND RECOMMENDATIONS ..8 3.1 AUTOMOTIVE BUSINESS REGULATORY SERVICES DELEGATION .. AGREEMENT ..8 3.2 PEACE OFFICER APPOINTMENTS AND AUTHORITIES ..9 3.2.1 INDIVIDUAL PEACE OFFICER APPOINTMENTS ..9 3.3 MEMORANDUMS OF UNDERSTANDING .. 10 3.4 ORGANIZATION STRUCTURE, JOB DESCRIPTIONS, ROLES 8 RESPONSIBILITIES ..11 3.5 AMVIC POLICY REVIEW .. 12 3.5.1 INVESTIGATION SERVICES POLICY ..12 3.5.2 CONSUMER SERVICES POLICY ..15 3.5.3 PEACE OFFICER POLICY ..15 3.5.4 ADMINISTRATIVE ACTIONS POLICY ..17 3.5.5 UNDERTAKING POLICY ..18 3.6 AMVIC OPERATIONAL REVIEW FEBRUARY 2013 ..21 4.0 INVESTIGATIONAL FILE REVIEW ..24 4.1 PROSECUTION FILES ..24 4.2 GENERAL INVESTIGATION FILES ..24 4.3 ADMINISTRATIVE ACTIONS UNDERTAKINGS ..26 4.3.1 ADMINISTRATIVE HEARINGS ..27 4.3.2 UNDERTAKINGS ..27 5.0 INTERVIEWS WITH STAFF AND MANAGEMENT ..37 5.1 INTERVIEW RESPONSES ..38 RECOMMENDATION SUMMARY REFERENCE: ..45 REFERENCES FOR BEST PRACTICES: ..48 Page 2 of 49 EXECUTIVE SUMMARY: Since 1999 AMVIC has maintained the responsibility for enforcing Alberta?s automotive industry regulations under the Fair Trading Act. AMVIC administers all aspects of these regulations including regulation, investigation and licensing. This is a significant responsibility considering the size of Alberta?s Automotive Industry and the fact that were it not for the existence of such a body, there would exist a void in managing the activities, conduct, representation and protection of both automotive suppliers and automotive consumers. This review found that while AMVIC is currently responsible for administering this role, several substantial deficiencies in policy and operational conduct were identified. Despite this, the review identified a high percentage of AMVIC employees who are committed to the principles and practice of providing and safeguarding an equitable and fair automotive industry in Alberta. It was evident that AMVIC employees maintain a strong commitment to their role in maintaining this environment. The most significant findings include the following: 1. The review would have expected to see substantial implementation of recommendations made by the Compliance and Accountability Unit conducted in February of 2013. A review of the recommendations that fell within the scope of this review found that while some recommendations were implemented or partially implemented, policies were not adhered to in a number of cases. Three -l-In \u ,1 of me uiX recommen ations were not implemented wh tsoever. 2. The current delegation agreement does not have a mechanism to allow Service Alberta to ensure that recommendations made pursuant to the provisions of Articles 6.7, 6.8 and 6.9 of the Agreement are discussed, considered and implemented where deemed prudent or in the best interest of mandate and operations. 3. The review determined that basic investigative principles were often not followed. The lack of relevant notes and evidence to support findings opens AMVIC up to appeals on administrative actions, the potential for civil actions and could jeopardize ability to appoint Peace Officers. Page 3 of 49 4. The review determined that a need exists for a clear division between the investigative and administrative processes within AMVIC. Doing so would mitigate potential conflicts of interest and ensure impartiality and fairness in the application of administrative actions. It is recommended that Service Alberta and AMVIC undertake immediate measures to actually and perceptually separate the roles of Executive Director of AMVIC and those of the Director (as delegated) under the Fair Trading Act. 5. A need exists for AMVIC to amend their Peace Officer Policy, by removing reference to any appeal process involving the AMVIC Board of Directors and substitute reference involving appeal to reflect the Director of Law Enforcement. 6. The level of staff attrition within AMVIC is well above average based on attrition rates from similar organizations. Employee dissatisfaction with AMVIC Management is unusually high and sharply critical of management conduct. It is recommended that action be undertaken forthwith to address the substandard morale and excessive voluntary staff turnover within AMVIC. It is recommended that immediate and substantive steps be taken and verified to ensure the reputation and credibility of AMVIC is maintained in the Alberta marketplace. It is reasonable to expect that the reputation of AMVIC would impact Service Alberta and the Alberta Public Service as a whole. Page 4 of 49 1.0 BACKGROUND In September 1999, AMVIC assumed the delegated responsibility for administering and enforcing Alberta?s automotive business regulations under the Fair Trading Act and the Automotive Business Regulation. The current Delegation Agreement between AMVIC and the Government of Alberta will expire September 30?h 2015. delegated responsibilities as outlined in the current Delegation Agreement include: licensing of automotive businesses and registration of automotive salespersons pursuant to the provisions of the Fair Trading Act and the Automotive Business Regulation, 0 investigations, claims and enforcement arising from complaints under the Fair Trading Act (FTA), the Automotive Business Regulation (ABR), the Cost of Credit Disclosure Regulation (CCDR) and the Internet Sales Contract Regulation (ISCR), - establishment and administration of the compensation fund and establishment of educational programs for consumers and industry members in relation to automotive businesses. AMVIC's last operational review was completed by Service Alberta?s Compliance and Accountability Unit in February 2013. The review produced a number of recommendations that were put forward to AMVIC for consideration and implementation. Since the completion of that review, a number of administrative and operational changes have occurred; most notably the Administrative Penalties (Fair Trading Act) Regulation that came into effect June 28?h 2013. On July 21St 2014, the Minister of Service Alberta directed that an operational review related to complaint handling and investigation resolution practices be initiated. The Ministerial directive provided the terms of reference for the review and specified that Service Alberta would conduct the review. Page 5 of 49 2.0 STATEMENT OF OBJECTIVES, SCOPE AND METHODOLOGY Objectives The operational review relating to complaint handling and investigation practices employed by the Alberta Motor Vehicle Industry Council (AMVIC) was designed to evaluate the effectiveness of AMVIC in fulfilling its mandate. Specifically, to determine if the current complaint handling protocol, investigative processes and complaint resolution practices compare favorably to best business practices, legislated requirements and accepted law enforcement standards. Scope The review included: - an assessment of established and documented investigative policies and practices, a an examination of both open and closed investigative files from 1 April 2013 to 9 September 2014 and 0 interviews with AMVIC management and investigative staff. The review was conducted from August to October 2014 by Service Alberta, specifically Dave Vicen, a Senior investigator with the Special Investigations Unit and Sean Seville, a Senior Investigator with the Consumer Investigations Unit. Methodology The review methodology included examination of: the Automotive Business Regulatory Services Delegation Agreement, 0 the Authorization to Employ Peace Officers and individual Peace Officer appointments pursuant to the provisions of the Peace Officer Act, 0 Memorandums of Understanding with police agencies and specific Government of Alberta operational areas, - AMVIC job descriptions, roles and reSponsibilities and organizational structure, Page 6 of 49 Methodology Cont. - AMVIC Operational policy, AMVIC Consumer Services policy, AMVIC Peace Officer policy, AMVIC Administrative Actions policy and AMVIC Undertaking policy, - application and use of the various complaint resolution options available pursuant to federal and provincial statutes, - recommendations contained within the February 2013 Operational Review specifically related to the scope of this review, 0 three categories of investigation files: a) Prosecution Files, b) General Investigation files (not arising in enforcement action) and c) Administrative Action Undertaking Files, 0 AMVIC staff essential and developmental training, including ongoing training and mentoring programs. in addition to management interviews, the methodology also included interviews with AMVIC investigators to obtain an organizational ?grass roots" perspective to solicit input to improve overall organization efficiency and performance. Page 7 of 49 3.0 ASSESSMENT, FINDINGS AND RECOMMENDATIONS 3.1 AUTOMOTIVE BUSINESS REGULATORY SERVICES DELEGATION AGREEMENT The most recent Delegation Agreement (?Agreement?) became effective October 1St 2012 and will expire on September 30th 2015. Upon review, the Agreement properly delegates the roles and responsibilities afforded to the Director of Fair Trading to By virtue of his position; the Executive Director of AMVIC acts as the Director (as delegated) under the Fair Trading Act, to conduct the delegated activities specified in Schedule of the Agreement. Article 6.8 of the Agreement indicates that ?the Minister may undertake a review of operations at any time? and as such, provides authorization for the Minister to conduct a review. Article 6.9 of the Agreement states that will respond to the recommendations, if any, in a review within 60 days or such other time as the Minister may specify in writing.? The Agreement does not contain provisions to require the implementation of, or compliance with recommendations. Unless an event of default (as specified in Article 15.1 of the Agreement) occurs allowing immediate termination of the Agreement, there are no compliance requirements stipulated. As such, any refusal by to accept or implement recommendations made under the authority of the Minister would require that the Minister: - accept that will not implement or observe a recommendation(s), 0 enter into a dispute resolution process as provided for by Article 16 of the Agreement, 0 have the Director of Fair Trading rescind delegations made to (Background item para 7 of the Agreement). This in turn would result in immediate termination of the agreement as stated in Article 17.2 of the Agreement. - Provide or accept termination the Agreement upon six (6) months? notice without cause. Therefore, the absence of specific compliance requirements within the Agreement on the part of AMVIC could give rise to situations that require enacting the measures indicated above that are extra-ordinary and perhaps more than may be required to address non-compliance with a recommendation. RECOMMENDATION 1: That a mechanism be developed and implemented that would allow the Director of Fair Trading to ensure that recommendations made pursuant to the provisions of Articles 6.7, 6.8 and 6.9 of the Agreement are discussed, considered and implemented where deemed prudent or in the best interest of mandate and operations. Page 8 of 49 3.2 PEACE OFFICER APPOINTMENTS AND AUTHORITIES The current Authorization To Employ Peace Officers (?Authorization?) issued to AMVIC by the Director of Law Enforcement of the Public Security Division, Department of Justice and Solicitor General was issued on January 11th 2013 and remains in effect. The Peace Officer Appointments provide Peace Officers employed by authority to enforce the Criminal Code of Canada, restricted to the following sections: a 129 (Obstruct a Peace Officer), 140 (1) (Public Mischief), - 330 (Theft by Person Required to Account), 334 (Theft over/ under $5,000), a 362 (2) (False Pretence over/ under $5,000), 0 366 (Forgery definition), a 367 (Forgery), - 368 (Utter a Forged Document) and 380 (Fraud) as they relate specifically to area of responsibility. The Authorization also provides those peace officers with authority to enforce the Fair Trading Act and Regulations thereto and the Provincial Offences Procedure Act. Authority to enforce the Traffic Safety Act is restricted to non?moving violations only. 3.2.1 INDIVIDUAL PEACE OFFICER APPOINTMENTS The appointments were examined to determine if Peace Officers possessed sufficient authority to enable them to perform the enforcement functions specified in the Agreement. The review determined that the appointments contained sufficient authority to allow AMVIC Peace Officers to perform their required functions and that no additional authorities are required at this time. At the time of review, the Director of Law Enforcement advised that AMVIC had eighteen (18) Peace Officers listed in their employ. Of special note is that neither the Executive Director nor the Senior Manager of Investigations had previous law enforcement experience and neither possessed a Peace Officer appointment. Appointments for each Peace Officer were examined for correctness and validity. It was found that four (4) of the Peace Officers shown as active by the Justice and Solicitor General Peace Officer 8: Security Services (POSS) Program were no longer employed by AMVIC. One had left employment approximately six (6) weeks prior, one eight (8) months prior and two had left AMVIC in excess of one (1) year prior. The Peace Officer Act and related Regulations require that upon termination of a Peace Officer, the authorized employer shall advise Justice and Solicitor General of such termination and must return both the Peace Officer Appointment document and their Peace Officer Identification card within 30 days of the termination. Page 9 of 49 Failure to comply with such requirements is a breach of the Regulations and therefore constitutes an offence pursuant to the Peace Of?cer Act. This non-compliance also breaches Articles 4.2(a) and Article 10.1 of the Agreement. This issue was immediately brought to the attention of AMVIC management, who were advised that it was apparent that the requirements had not been met. AMVIC management was advised that the reviewers were duty bound to report this finding forthwith to the POSS Program Manager and that such notification had occurred. The AMVIC Senior Manager of Investigations was provided with contact information and a recommendation that they contact the POSS Program Manager forthwith to seek further direction. The Program Manager later confirmed that AMVIC had made contact and obtained direction. RECOMMENDATION 2: That AMVIC management review the requirements as specified in the Peace Officer Act and related Regulations and take steps to ensure full compliance with those requirements in the future. 3.3 MEMORANDUMS OF UNDERSTANDING All law enforcement agencies use Memorandums of Understanding (MOUs) reached with and agreed to by other partners or stakeholders, such as other law enforcement agencies or specific areas within government. The MOUs permit exchange and/or access to information or services to fulfil the agency?s mandated duties or requirements. AMVIC currently has twelve (12) Three (3) are with the Government of Alberta: Access to Motor Vehicle Information Regulation agreement with Service Alberta Data Access Contract Management Unit (DACMU) and two (2) with Service Alberta Personal Property Registry and Corporate Registry. One (1) MOU is with the Canadian Police Information Centre to allow criminal record searches. One (1) MOU is with the Insurance Corporation of British Columbia (ICBC) for the purposes of sharing related information. The remaining seven (7) are with law enforcement agencies including the Royal Canadian Mounted Police, Edmonton Police Service, Calgary Police Service, Lethbridge Police Service, Medicine Hat Police Service, Camrose Police Service and Taber Police Service. There is no MOU in place with the Lacombe Police Service. The MOUs were examined to ensure they were valid and identified AMVIC's current designated representative. The MOUs with Calgary Police Service, the Canadian Police Information Centre and the Royal Canadian Mounted Police were current and did not require any changes. Page 10 of 49 The MOUs with GOA - DACMU, Personal Property Registry, Corporate Registry, Medicine Hat Police Service, Lethbridge Police Service, Taber Police Service, Camrose Police Service and the Insurance Corporation of British Columbia were valid. The however contained outdated names and signatures relating to designated representative. The MOU with Edmonton Police had expired 17 months prior on March 28th 2013. The potential consequences relating to an expired MOU are that the police agency is under no obligation to provide additional police related services to AMVIC Peace Officers. Such services could entail prisoner acceptance and housing, conducting judicial interim release hearings on behalf of AMVIC, provision of Identification of Criminals Act processing for Criminal Code charges laid by AMVIC Peace Officers, or the entering of arrest warrants onto the CPIC database. The lapse of the Edmonton Police Service MOU was considered to be of critical importance, therefore Senior Manager of Investigations was advised and strongly encouraged to have the MOU updated and renewed. A follow-up inquiry with the Senior Manager of Investigations made 10 days later determined that the MOU had been updated and would be submitted for partner approval and sign-off very shortly. RECOMMENDATION 3: That AMVIC exercise additional diligence to ensure all MOUs are kept current and valid. It is further recommended that AMVIC update all MOUs to ensure that the names and signatures representing AMVIC and designated AMVIC representatives are current. 3.4 ORGANIZATION STRUCTURE, JOB DESCRIPTIONS, ROLES RESPONSIBILITIES. The present Organizational Structure is as it is depicted in Organizational Chart. There appears to be adequate job descriptions that harmonize with the roles and responsibilities associated to each of the identified positions; however job postings were only available for the Team Lead and Investigator positions. The Roles and responsibilities of the Executive Director were found to be contained within the job description for the Executive Director. The roles of the Senior Manager of Investigations, Team Lead and Investigator are outlined within the Investigation Services Policy and do identify the individual position requirements and responsibilities. Page 11 of 49 3.5 AMVIC POLICY REVIEW A review was conducted of AMVIC policies, specifically those addressing the areas specified in the reviews' Terms of Reference. The AMVIC policies reviewed were: a) Investigation Services Policy, b) Consumer Services Policy, c) Peace Officer Policy including complaints against AMVIC Peace Officers, d) Administrative Actions Policy and e) Undertaking Policy. The first three (3) policies were reviewed and approved in March 2014. The Administrative Actions Policy was reviewed and approved in January 2014 and the Undertaking Policy was reviewed and approved in November 2013. When the first four (4) current policies were compared to previous policies, it became apparent that a significant time and effort had been expended to bring the previous policies up to their current status. The first four (4) new policy manuals contained much more detail than previous versions and were easily understood and user-friendly. The single exception was the November 2013 version of the Undertaking Policy which will be addressed under 4.5.4 - Administrative Actions Policy where it is recommended that this policy be deleted as the more accurate guidance is already provided within the Administrative Actions Policy. 3.5.1 INVESTIGATION SERVICES POLICY Part A Investigations: contains an overview of the policy, background information, legislative authority and requirements, jurisdiction, definitions and a legal reference for the term ?Unfair Practice" as identified in the Fair Trading Act. In Part A, Para 1.2, the policy addresses the Authority of the Director (as delegated). The policy reads ?The policy does not bind the Director or othenrvise hinder or limit the authority and discretion of the Director when receiving and addressing enquiries and complaints. . Best business practices followed by small to mega-size corporations all direct that corporate policy effectively includes all persons contained within the organization to ensure that expectations, corporate processes and performance objectives are universally applied. Such policies do not contain exemptions for specific persons within the organization. Therefore everyone from the mail room clerk to the CEO. is encompassed by the same policy. Page 12 of 49 RECOMMENDATION 4: That AMVIC delete the portion of the policy contained within Part A, Para 1.2 as it relates to Director Exemption from policy adherence. Part Quality Standards: contains an overview of the quality standards relating to natural justice and administrative fairness, participation rights of those involved in investigations, impartiality, discretionary power and the reasonableness of investigative conclusions. In Part B, Para 2.1.1, the policy indicates that "the minimum standard of proof as to whether a contravention has occurred is the balance of probabilities; that is, it must be more probable than not that the contravention occurred.? Review of the Fair Trading Act and associated regulations as specified in the Peace Officer Appointment found that with odd exception, contraventions of the Act or Regulations constituted offences. As such, in relation to offences, the use of the terms ?probability? or ?probable? cannot be used to qualify the acceptable standard of proof relating to contraventions of law. Such standard of proof must be that of ?reasonable and probable grounds?? a level of proof much higher than mere probability and what is required to establish guilt beyond a reasonable doubt. RECOMMENDATION 5: That AMVIC amend the standard of proof from ?balance of probability? to that of ?reasonable and probable grounds?. In Part B, Para 2.1.9, the policy addresses statement taking by investigators. The policy advises that statements may be obtained by: listening to the individual?s verbal statement and taking notes, b) taping or digitally recording the individual?s verbal statement, or c) by obtaining a written statement from the individual. It has been widely accepted by the Courts and is considered a ?best policing standard? to have statements captured by recording systems utilizing both video and audio capabilities. This is especially true with the capture of suspect accused statements intended for evidentiary purposes. Quasi-judicial hearings related to the issuance of undertakings, director?s orders, administrative penalties and licensing sanctions should also be recorded to avoid misinterpretation or for the purposes of future appeals. AMVIC does not use such recording systems, nor do their offices contain dedicated interview suites. RECOMMENDATION 6: That all AMVIC offices dedicate an interview suite equipped with a recording system capable of both video and audio capture. Part Enforcement: contains an overview of enforcement practices/expectations, criteria! considerations for the issuance of Written Warnings, Violation Tickets, Undertakings, Director?s Orders, Administrative Reviews and Administrative Penalties. The policy addresses expected goals when applying enforcement measures, determination of appropriate enforcement measures and the relevant factors to be considered when applying an enforcement action. In short, there are a substantial number of considerations when investigators are contemplating enforcement action. Page 13 of 49 For investigators possessing limited enforcement experience, the factors for considering and recommending appropriate enforcement actions that are consistent with AMVIC goals could be a challenge. This matter was informally discussed with AMVIC management and a sanction model used by Service Alberta Registries when dealing with inappropriate behavior by registry agents or clerks was provided for example. Such models for internal discipline, the appropriate use of force and manpower deployment are common within law enforcement and private industry. These models provide a visual guide for users to determine an appropriate course of action. The models promote consistency in enforcement, provide transparency in process and can be used to defend decisions should a complaint be received or a decision be appealed. RECOMMENDATION 7: That AMVIC develop and implement a sanction model to determine appropriate enforcement action, promote consistency in enforcement, create external transparency and assist in defending decisions. During the staff interview segment, it was found that the charge approval process was very cumbersome and resulted in significant delays. The current charge process for Criminal Code of Canada or the Fair Trading Act including related regulations was described as follows. Investigator?) Peer Review -)Team Lead Manager of Investigations Manager of Investigations {?Crown Retained counsel This process requires an investigator to obtain pre-charge approval through up to five (5) separate and distinct levels before a charge can be laid. The process appears to be onerous and time consuming. The Team Lead?s qualifications as stated within the job description include: ?having extensive policing experience involved in senior level management and/ or a combination of investigation and leadership experience? and ?serving as an expert resource to Peace Officers in the areas of legislation interpretation, investigative techniques, procedural direction, case law, administrative hearings, administrative sanctions and prosecutions.? AMVIC policy indicates in part, the Team Lead?s role is to provide oversight and assistance to investigators. Based upon the required qualifications and the defined role contained within AMVIC policy for the Team Lead position, it would be a safe assumption and expectation that the Team Lead possesses sufficient knowledge and experience to approve investigator charge submissions. This would not negate the seeking of guidance and/or Crown pre?charge approval for those investigations involving complex circumstances or sensitive issues such as execution of search warrants involving law firms, etc. Page 14 of 49 Currently, investigators may only issue a Warning Letter or issue a charge relating to a Mechanical Fitness Assessment offence under the Traffic Safety Act. RECOMMENDATION 8: That AMVIC simplify their charge approval protocol for ALL charges (except those involving complex circumstances, sensitive issues or when deemed prudent to do so by the Team Lead andlor Sr. Manager of Investigations) to allow charge approval to be given by the Team Lead. 3.5.2 CONSUMER SERVICES POLICY This policy primarily deals with the receipt and handling of public enquiries and industry related complaints. The policy is well written and detailed. It was noted that the policy consists of seven (7) pages and may be somewhat cumbersome to navigate. Almost all law enforcement agencies use a complaint handling ?flow chart" that permits a quick and visual staff reference guide to determine the appropriate and subsequent activity when receiving a complaint. RECOMMENDATION 9: That AMVIC develop and implement an enquiry I complaint handling ?flow chart? to assist staff in determining the appropriate handling process. 3.5.3 PEACE OFFICER POLICY This policy was reviewed and approved on March 12m 2014, and consists of four (4) parts. Part A Background: This part provides background and the requirements for having a policy in place for standards of conduct. No issues were identified in this part. Part Code of Conduct for AMVIC Peace Officers: This part addresses the AMVIC Peace Officers Code of Conduct and provides detailed definitions for each of the eight (8) prohibited act'vities specified within the Code of Conduct. No issues were identified in this part. Part Handling Public Complaints about a Peace Officer: This part provides procedural direction when handling complaints involving Peace Officers. In Part C, Para 1.4.2, the policy states "complaints received verbally shall be summarized in writing by the Executive Director and shall be handled in the same manner as complaints that are made in writing. Para 1.4.4 of the policy states ?The Executive Director shall provide the Peace Officer with a copy of the complaint if made in writing or a copy of the summary of the complaint made by the Executive Director if the complaint was received verbally.? Section 14 of the Peace Officer Act states ?Any person may, in accordance with the regulations, make a complaint in writing regarding a peace officer to the peace officer?s authorized employer.? There is no provision contained within the Peace Officer Act for receiving complaints in verbal format only. Page 15 of 49 RECOMMENDATION 10: That AMVIC amend the policy contained within Part C, Para 1.4.2 and Para 1.4.4 relating to verbal complaints about Peace Officers. Para 1.6 allows for informal resolution of complaints made against Peace Officers where direct discussion with the complainant can be facilitated and the issue can be mutually resolved. Law enforcement agencies use informal resolution where practicable and have realized significant success in resolving minor issues. Both Edmonton and Calgary Police Services have "Informal Resolution? forms for use in these instances. The form identifies the complainant, provides a brief description of the complaint and the resolution agreed upon and indicates that the complainant is satisfied with the resolution and wishes to discontinue the complaint. The complainant and the officer's supervisor sign and date the form as evidence of resolution. The complainant is given a copy of the signed form and the original is retained by the supervisor for inclusion in the officer's performance file. The use of the form provides a record of the informal resolution, provides finality to the complaint, negates the possibility that the same complaint could arise in the future and can be utilized to monitor an officer?s performance. RECOMMENDATION 11: That AMVIC develop and utilize an informal resolution form for complaints against Peace Officers. Part Administration of Discipline for Peace Officers: Para 1.7 outlines the course of disciplinary action relating to AMVIC Peace Officers. The Executive Director presents the allegations and the findings of the investigation to the Peace Officer. The Peace Officer is given an opportunity to make a full response to the allegations and provide supporting evidence. The Executive Director shall hear the explanation offered by the Peace Officer and consider any other information deemed relevant to determining the facts. The Executive Director will then adjudicate the matter and determine if the complaint is unfounded unsubstantiated, frivolous, vexatious or made in bad faith, found to have merit in whole or in part or determine that the Peace Officer has committed a misconduct. If the Executive Director finds that the Peace Officer has committed a misconduct. he may take one of the following disciplinary actions: a) warn the Peace Officer, b) reprimand the Peace Officer, c) suspend the Peace Officer without pay or d) terminate the Peace Officer's employment with AMVIC. Para 1.8 states that the Executive Director must notify both the complainant and the Peace Officer in writing of the results of an investigation, the action taken and the right to appeal the decision to the AMVIC Board of Directors within thirty (30) days of the decision. Page 16 of 49 The policy advises that upon receipt of an appeal and after reviewing the information, the AMVIC Board of Directors may dismiss or allow the appeal. If the appeal is allowed, the AMVIC Board of Directors may impose discipline as outlined or to vary the discipline to meet the circumstances. The Board of Directors will provide written notification to the complainant and the Peace Officer of the results of the appeal. The policy states that subject to the applicable provisions of the Peace Officer Act, the decision of the Board of Directors to hear the appeal is final. It further states that the Executive Director will notify the Director of Law Enforcement of the appeal outcome. Para 1.8 of the policy directly conflicts with the contents of Sections 15(4) and 15(5) of the Peace Officer Act. The Act specifies that the Director of Law Enforcement must conduct a review upon receiving a request from the complainant. It specifies that upon completion of the review, the Director of Law Enforcement may direct the authorized employer to take any action that the Director deems appropriate, or confirm, reverse or vary the authorized employer?s disposition and that the Director?s decision is final. There is no statutory provision for an intermediary appeal process to be conducted at another level within the authorized employer's organization prior to requesting a review by the Director of Law Enforcement. RECOMMENDATION 12: That AMVIC amend their Peace Officer Policy, Part at Para 18 by removing reference to any appeal process involving the AMVIC Board of Directors and substitute reference involving appeal to reflect the Director of Law Enforcement. Finally, the policy advises that the Executive Director shall provide the complainant with a conclusion letter containing that ?appeals of the decision reached by the authorized employer? must be made in writing within 30 days of this decision and be sent to the Director of Law Enforcement pursuant to Section 15(4) of the Peace Officer Act. The Executive Director is acting on behalf of the AMVIC Board of Directors and is the de facto ?authorized employer? relating to administration of discipline for peace officers. It was noted that there was no formal policy relating to complaints against management, who are not Peace Officers. 3.5.4 ADMINISTRATIVE ACTIONS POLICY Administrative Actions are sanctions that may be applied toward an individual or business determined to be in contravention or violation of the related Acts and Regulations. It is important to note the distinction of the term ?Administrative Action? from ?Administrative Penalty?. Administrative Action refers generally to the specific enforcement tools that include formal warnings reprimands, licensing sanctions restrictions, undertakings, injunctions and directors orders. An Administrative Penalty would ensue from such action and may be of an administrative or monetary nature or a combination thereof. Page 17 of 49 A review was conducted of the Administrative Action Policy (Version 1 January 28, 2014). This Policy was found to be accurate, current and contained clear explanations for Administrative Actions. In short, it was found to be a good policy reference document. There was only 1 item that it is recommended should be amended. This section relates to Undertakings and was likely a typographical error, but may be contributing to a misunderstanding by some AMVIC staff. Currently the Undertaking Policy reads: ?3.2.c Considerations An Undertaking should typically only be offered if the identified breaches have been resolved. There is another enforcement or administrative option available if the supplier refuses to enter into an Undertaking.? Section 152(1) of the Fair Trading Act states that an Undertaking can be used when there is a contravention the Director is satisfied that the contravention has ceased. RECOMMENDATION 13: That this portion be amended to read - An Undertaking should typically only be offered if the identified breaches have been resolved there is another enforcement or administrative option available should the supplier refuse to enter into an Undertaking. 3.5.5 UNDERTAKING POLICY As indicated above, an Undertaking is one of a number of Administrative Actions. A separate "Undertaking Policy? (Version 1, November 13, 2013) was provided by AMVIC. It was felt that this policy document was less reflective of the legislative spirit of Undertakings, possibly due to a personal interpretation of the purpose and context of Undertakings. This document in fact conflicts with the Administrative Actions Policy. Currently the policy reads: A. INTRODUCTION Background The Director of Fair Trading (as Delegated) (hereinafter referred to as the ?Director?? can recover up to the full cost of an investigation under the Fair Trading Act. This is based on the principle that suppliers whose improper activities use AM VlC?s resources or cause AMVIC activity, including costs of technical expertise, should bear either all or a portion of the cost of those expenses. Costs assessed do not act as a form of punishment. Page 18 of 49 This is neither the foundation nor purpose of an Undertaking. Investigation cost recovery is more accurately a condition included as part of the Undertaking and not merely intended as a tool designed to recover investigation costs. It is important to note that monies related to investigation costs specified in an Undertaking are provided directly to AMVIC, whereas monies arising from Administrative Penalties are forfeited to Crown. This fact requires that the form of any Administrative Action be carefully considered in an equitable and transparent fashion. The next section of the Undertaking Policy continues: ?1.1 Undertaking Guidelines The Investigator may consider the following factors when determining if an Undertaking is an appropriate enforcement option: Previous enforcement actions for similar contraventions, Gravity and magnitude of the contravention, Extent of harm to others, Whether the contravention was repeated or continuous, Whether the contravention was deliberate, Any economic benefit derived as a result of the contravention, The person?s efforts to correct the contravention." \r \7 These factors are more accurately considerations for the terms and conditions of an Undertaking, not the suitability for use of an Undertaking. The above sections in fact differ from the AMVIC Administrative Action Policy for Undertakings. The AMVIC Administrative Action Policy for Undertakings is accurate and reads as follows: ?Section 3.2a Background Supplier?s Undertakings 152(1) When the Director is of the opinion that a person has contravened this Act or the regulations, and the Director is satisfied that the person has ceased the contravention, the person may enter into an Undertaking with the Director in the form and containing the provisions that the Director, on negotiation with that person, considers proper.? Page 19 of 49 ?Section 3.2.b Use Entering into an Undertaking is voluntary and the elements of an Undertaking are generally negotiated by the Director. Undertakings are used to conclude an investigation and may be used when an individual or business has resolved a breach. They can involve a voluntary payment of investigation costs (voluntary payment cannot exceed the investigative costs) under s. 176 and/or 152(2)(d) by a person who has admitted to and resolved a breach of the Act or Regulation. Section 152(2) identifies the Undertakings that may be included: - To stop engaging in a practice or to change a practice described in the Undertaking; - To provide compensation to anyone who has suffered a loss; - To publicize the Undertaking or action being taken; - To pay the costs of investigating the person?s activities and any costs associated with the Undertaking. Undertakings are public records and will be posted on the AMVIC website under Enforcement Actions. Suppliers should be advised of this when an Undertaking is being offered. An Undertaking can be used once for a breach of the Act. There currently exists as outlined above, conflicting policy relating to the Background (framework) and Guidelines (use) of Undertakings between the 2 AMVIC policies. The AMVIC Administrative Actions Policy is the document that is favoured and best describes the intent and authority for the use of Undertakings relating to the Fair Trading Act. During the review of the AMVIC Undertaking Policy, it was evident that this document had as part of its purpose the intent of providing direction for forwarding and supporting an Undertaking recommendation. This aspect is more procedural and should be encapsulated within a general process guide for all Administrative Actions; as the investigation, supporting evidence and justification for the recommendation of Administrative Actions should typically follow the same approvals process. 14: That the Undertaking Policy be substantially re-written to be consistent with the Administrative Action Policy or preferably, the Undertaking Policy be removed in its entirety leaving the Administrative Actions Policy as the single reference source for all Administrative Actions. Page 20 of 49 3.6 AMVIC OPERATIONAL REVIEW FEBRUARY 2013 Service Alberta Compliance Accountability Unit conducted an operational review of AMVIC in February 2013. The results of the review produced a total of fifty one (51) recommendations that were subsequently discussed with the AMVIC Board Chairman and the Executive Director. The majority of the recommendations dealt with administrative, financial, organizational or logistics issues. A total of six (6) recommendations were found to be encompassed within the scope of this review. As such, only these six (6) recommendations will be addressed below along with the assessment relating to their implementation as found by this 2014 review. One) 4.3.1 FINDING: ?As in 2009, there is no policy relating to the process of the administrative hearings except for the information contained in the Licensing Procedure Policy.? RECOMMENDATION: ?We recommend that AMVIC develop policy regarding administrative hearings, including notifying individuals of the hearing, hearing procedures and retention of important documents related to licensing decisions.? Result: Not Implemented. AMVIC Investigative Services Policy, Article 7.1 states only ?At an administrative hearing, the director hears evidence presented by AMVIC and the licensee and determines whether a contravention has occurred.? Part C, Article 2.1.3 of the same policy states ?Before refusing to issue or renew a licence. . ..the applicant or licensee must be given written notice of the proposed refusal. . ..with reasons, and an Opportunity to make representations to the Director. Part C, Article 2.1.21 of the same policy states ?Before imposing an administrative penalty in an amount of $500 or more, the Director shall advise the person in writing, of the Director?s intent to impose the Administrative Penalty and the reasons for it, and provide the person with an opportunity to make representations to the Director. Although these two Articles indicate ?with an opportunity to make representations?, the terminology is rather ambiguous in that there is no direction as to the manner or method required in making the representations, nor is there any content outlining hearing procedures. Part C, Article 7.2 of the same policy states ?The policy and procedures for a Director?s Administrative Review are contained in the Undertaking Policy and the Administrative Actions Policy. Neither the Undertaking Policy nor the Administrative Actions Policy contains reference to notification of individuals or hearing procedures. No references relating to retention of important documents were found. Page 21 of 49 Two) 4.3.2 FINDING: ?Currently, AMVIC does not accurately record the time spent on investigations. This information would be essential in determining investigative costs for the purposes of an Undertaking. For the sample of Undertakings reviewed, there were several instances where no indication was given to time spent on the investigation.? RECOMMENDATION: ?We recommend that AMVIC update their investigation policy and any other related policies to require investigators and other staff to record the time spent on all files to facilitate the computation of costs in the event an Undertaking is proposed.? Result: Partial Implementation. There is policy that describes the process for the assessment of investigative costs, but it is not being adhered to. Article 1.2 of the Undertaking Policy and Article 8 of the Administrative Actions Policy contain the same information: Staff hours, as shown on the AMVIC database, spent on an investigation are charged at the current rate as approved by the Director. This includes investigative staff, administrative staff, department legal staff, travel time, meeting time, hearing time and any other time spent by staff?. Costs of special and or technical experts or witnesses (including evidence testing, expert opinions and external legal opinions. However, When conducting the reviews of the hard copy investigation files, it was found that the recording of time spent on the investigations was sporadic. In addition, random checks conducted on the AMVIC database known as CATS as well as the replacement database known as NAVANTIS found that investigation time recording may be present, not present or incorrect in one instance the entire investigative time spent on an investigation file where an Undertaking had been issued only totalled twenty five (25) minutes and resulted in a $500.00 assessment of investigative costs within an Undertaking. Three) 4.3.2 (3) FINDING: ?Review of a sample of Undertaking files found that in many cases there was not supporting documentation to justify the amounts charged to the individual or business.? RECOMMENDATION: ?We recommend that AMVIC develop and implement a policy relating to the use of Undertakings.? RESULT: Implemented. AMVIC did develop an Administrative Actions Policy and an Undertaking Policy. It is recommended in this review that the Undertaking Policy be abandoned in favour of the existing Administrative Actions Policy. Page 22 of 49 Four) 4.3.2 FINDING: "At the time of the review, files completed by the Director of Investigations or the Manager of Investigations (North) themselves were not reviewed by another staff member prior to closing; each reviewed and closed their own files". RECOMMENDATION: ?We recommend that AMVIC update the Investigation Policy to govern review of investigation files and ensure all investigation files are properly reviewed by another staff member.? RESULT: Not implemented. During the file review process including searches of the CATS and NAVANTIS databases, it was noted that the databases did not indicate file closure with any consistency. The review of the ?hard copy" files rarely contained documented file closure. There were also numerous examples of case files being ?generated by? and ?assigned to" the Senior Manager of Investigations, which is contrary to the purpose and intent of a report approvals process. Five) 4.3.2 FINDING: "The Investigation Policy does not identify how AMVIC determines whether a complaint will be investigated. The policy also does not identify the process for refusal or closing of complaints. AMVIC has not established criteria to guide any appeal process available to complainants when they are dissatisfied with complaint handling or the investigation outcome.? RECOMMENDATION: ?We recommend that Board ensures consistency in the complaint investigation process by reviewing and updating the Investigation Policy to for or closing of process for complainants.? RESULT: FuIl Implementation. Policy concerning the finding indicated above appears within the AMVIC Consumer Services Policy and contains an avenue of appeal involving the Consumer Services Team Lead as outlined in Part B, para 2.1.14 of the policy. Six) 4.3.2 - FINDING: occasionally receives complaints that fall outside the scope of their mandate. The Investigation Policy provides little guidance on how complaints of this type should be dealt with and when they should be referred to other law enforcement agencies. The policy is still silent on the actual transition of a file to an outside agency.? RECOMMENDATION: ?We recommend that Board update the Investigation Policy to include the process of forwarding complaints outside the scope of mandate to outside law enforcement agencies. RESULT: Not implemented or addressed Page 23 of 49 4.0 INVESTIGATIONAL FILE REVIEW To determine the conformity of investigational files to the policies, best practices, enforcement investigation standards and compliance with law, this portion of the review was broken down into 3 file types. These were: a) Prosecution Files b) General Investigation Files (not arising in enforcement action) and 0) Administrative Action Undertaking Files. The files that were examined were for the ?in?scope? period of April 2013 to the file review date ending 8 September 2014. 4.1 PROSECUTION FILES Twelve (12) Prosecution Files were reviewed. These files resulted in various charges that were referred to the Crown for prosecution. The Prosecution Files were complete. substantiated and professional. There were some small inconstancies noted between investigators that were reflective of investigator preference but did not detract from the effectiveness of the final product. it was noted that the Prosecution Files were typically completed by one of 4 investigators; all who have had significant police investigative experience and would be completely familiar with what is required for a successful prosecution. The files reviewed reflected what would be expected form a quasi-judicial investigative body. 4.2 GENERAL INVESTIGATION FILES A number of General Investigation files were randomly selected and reviewed. These files were conducted by AMVIC but did not result in charges being referred to the Crown for prosecution. These files were considered in context with the Prosecution Files, Undertaking Files and Administrative Action files. The most common issues with these files also tended to present themselves in varying degrees within the other file types. A small percentage of these files met what would be considered a minimum standard to be expected from a quasi-judicial investigative body. The remainder fell significantly short of this standard and were unacceptable. Page 24 of 49 The more common concerns relating to these files were: a) No consistent reporting structure or format. b) Lack of standardization of reports or forms utilized by investigators. c) The case file Complaint Cover Sheet was very often found to indicate ?Open? with no conclusion date despite the file having apparently been concluded. There was also no indication that the file had been reviewed or approved by a supervisor. d) There were references made within files to letters, correspondence, reports and emails that were not contained within the file itself. Therefore, in the event of a complaint, appeal. subsequent violations or disclosure requests, the file would be at best inadequate for reference or incapable of meeting lawful disclosure requirements. e) Investigator notes were found in a number of cases to be inadequate. Many were recorded on various types of paper, written on the file jacket or stuck somewhere in the file on Post-it Notes. Although there are occasions where the recording of investigator notes will be on different mediums, these notes have to be captured in a fashion that will not be lost and suitably included and disclosed within the file. It was found that these notes in general did not indicate: 1) who wrote the notes, 2) what the notes reflect interview, meeting, phone conversation, hearing), 3) individual page number or the total number of pages, 4) a signature or other marking by the writer, 5) the case file number for reference. Compliance with these basic investigative principles would be a minimum expectation for any form of regulatory or enforcement body. During interviews with investigators in Calgary and Edmonton, the large majority of investigators indicated that they are frequently provided direction either directly or implied, as to how to proceed with an investigation. This direction was from the Executive Director himself or passed on through the Senior Manager of Investigations. Those directions suggested the appropriate outcome of an investigation and/or personal opinions relating to the character or Operations of an individual or business. It is appropriate for Management to provide guidance or direction relating to practice and policy, or to approve additional manpower or resource requests. It is inappropriate to direct investigations or request constant updates to dictate subsequent investigative actions. Investigators are Peace Officers and must be permitted to conduct investigations in an unbiased, fair and objective manner. Investigative conclusions can best be determined when the investigation findings and the evidence that was found (whether the evidence be inculpatory or exculpatory) is amassed and viewed in an overall context. Any conduct adverse to the principles of a fair and objective investigation is not an acceptable investigational practice, would be unethical and may constitute a breach of Section 11(d) of the Canadian Charter of Page 25 of 49 Rights Freedoms or contravene the provisions contained within Section of the Criminal Code of Canada. The ramifications of not accepting or not applying this principle are exemplified in the sections under Administrative Actions Undertakings. RECOMMENDATION 15: That AMVIC ensure that they formalize a standardized investigation format and system to ensure complete and defendable investigations that comply with modern investigative practices that would withstand scrutiny andlor compliance with lawful disclosure requests. RECOMMENDATION 16: That AMVIC ensure all investigative staff receives training where required in the principles and practices involved in conducting and recording an investigative report. RECOMMENDATION 17: That a formalized and structured review and approvals process be utilized for all investigative reports to ensure they meet an acceptable standard for an enforcement body. RECOMMENDATION 18: That the Executive Director not engage or even be perceived to engage in the direction or findings of an active investigation conducted by AMVIC investigators. The Executive Director role is akin to a law enforcement agency?s senior management, which will receive updates in relation to progress and anticipated timelines or the approval of additional financial or personnel requests. This position would not be actively or directly involved in any fashion with the investigation. 4.3 ADMINISTRATIVE ACTIONS I UNDERTAKINGS Administrative Actions are in essence sanctions that are imposed upon an individual or supplier for contravention of an act or statute that an enforcement body (AMVIC) has been statutorily authorized to administer and/or enforce. AMVIC can most accurately be described as a quasi-judicial body and as such is bound by the principles of fundamental justice, natural justice and the rules of evidence. This is of utmost importance in maintaining public support, the support of other law enforcement agencies, and the industry that AMVIC is entrusted to regulate. AMVIC must be and be seen to engage in equitable and uniform application and enforcement that has both the reality and objective appearance of being unbiased. Ultimately, challenges and appeals of the actions of a quasi?judicial body in Alberta would be heard in the Court of Queen?s Bench which holds adherence to these fundamental principles in the utmost regard. Page 26 of 49 4.3.1 ADMINISTRATIVE HEARINGS Two (2) Administrative hearings were reviewed. The outcome and penalties arising from these hearings appeared consistent and reasonable based on the findings of the investigation, submissions/admissions by the respondent and the justification of costs for both investigation and where applicable, restitution to a consumer. These matters did not meet an acceptable standard in terms of providing a sufficient record of the hearing. The hearing was not audio or video recorded and there were no, or insufficient minutes/notes made of the hearing. Some of the very limited notes reviewed in fact raised concerns about the voluntariness of a subsequent Undertaking. Further, they did not record everyone who may have attended or in what capacity, the start or conclusion time of the hearing, or the specific representations made by either party. These omissions do not meet commonly accepted practice or the expectations when conducting a quasi-judicial hearing. Further, they will not be sufficient to enable AMVIC to defend their actions or provide an accurate account of what was said or presented in the hearing or the basis for any findings. It is believed that an appeal of an AMVIC decision to the Courts would subject AMVIC and others to significant criticism in this regard and could give rise to further appeals or overturned decisions. RECOMMENDATION 19: That AMVIC at once engage in the practice of at least audio or preferably audio and video recording all hearings and maintaining a permanent record of these recordings consistent with their record retention policy. 4.3.2 UNDERTAKINGS Twenty-eight (28) Undertaking files were reviewed. As a result of concerns encountered during the Undertaking file review, two (2) interviews were conducted with representatives from automotive dealers in Edmonton who were subject to Undertakings. To assess the matter of Undertakings, they were separated into 2 categories which were: a) The Policy and Process for Undertakings b) The Administration of Undertakings Page 27 of 49 A) Policy and Process for Undertakings Section 152(1) of the Fair Trading Act States that an Undertaking can be used when: the Director is of the opinion that a person has contravened this Act or the regulations, and the Director is satisfied that the person has ceased the contravention, the person may enter into an Undertaking with the Director in the form and containing the provisions that the Director, on negotiation with that person, considers proper. Undertakings must therefore meet the requirements set forth under and and must be voluntarily entered into by the supplier and stipulate conditions arrived at upon negotiation between the Director and supplier. The AMVIC Administration Policy includes this Section exactly as it appears above. The AMVIC Administration Action Policy (Version 1 January 28, 2014) reads: ?Section 3.2 - Undertakings Section 3.2.a Background: Supplier?s Undertakings 152(1) When the Director is of the opinion that a person has contravened this Act or the regulations, and the Director is satisfied that the person has ceased the contra ven ion, the person may enter into an Undertaking with the Director in the form and containing the provisions that the Director, on negotiation with that person, considers proper. Assessment 1 - That Administrative Actions Policy accurately states the above conditions as outlined under Section 152(1) of the Fair Trading Act. ?Section 3.2.b - Use Entering into an Undertaking is voluntary and the elements of an Undertaking are generally negotiated by the Director.? Assessment 2 - That Administrative Actions Policy recognizes that an Undertaking must be voluntary Page 28 of 49 During the review of the Undertaking files, numerous concerns arose relating to the voluntariness of Undertakings. There was insufficient information within the files to demonstrate how the Undertakings arose. A review of the circumstances in which an Undertaking was issued necessitated in both reviewer?s minds that personal interviews with the respondents of two (2) Undertakings should be conducted to establish the circumstances and actual voluntariness of the Undertakings. Each reviewer conducted a personal interview with a respondent. To protect the identity of these individuals, the specific findings are generalized, but arrive at a consistent conclusion. The general circumstances were as follows: There was an allegation of a contravention on the part of an automotive dealership. Before or without the benefit of a completed investigation, Executive Director initiated the issuance of a notice of hearing (review) to the respondent. In this correspondence it was stated that it is within the authority of the Director (as delegated under the Fair trading Act), to suspend or cancel a business license. A hearing, often referred to as a "review" was conducted and an Undertaking and monetary penalty was tendered by the Director. If the party did not accept the conditions of the Undertaking, it was pointed out that an Administrative Hearing would be conducted (by the Director as delegated who is also the Executive Director of AMVIC) and a repercussion could be the suspension or revocation of the business license. Both parties who were interviewed indicated that upon entering into the original hearing or "review" it was a foregone conclusion as to what would transpire, that being a determination of an offense. They were also fully aware that the Administrative Review would also be conducted by the Executive Director, who had himself made the original determination. The Undertakings which were required to be signed by the respondent did state that the parties have had an opportunity to contact legal counsel, which they did have. The Undertakings also stated that they were voluntary. This was felt not be the case as it relates to the actual voluntariness of the Undertaking. Both parties indicated that the proposed penalty was far less than the global impact that a loss or suspension of their business license would have on the dealership and its employees. Essentially the respondents felt that they could either accept the Undertaking or take a far larger risk in defending themselves. The individuals were fully aware that in the event of a suspension or cancellation, the damage would have already been done and challenging the decision would involve a great deal of time and money. It was the opinion of the reviewers that the standard test of ?a reasonable man? would not conclude that the Undertakings were entered into under conditions that would be considered voluntary within a legal context. Assessment 3 That AMVIC's Administrative Actions Policy recognizes that Undertakings are used to conclude an investigation when a business has resolved a breach, and wish to voluntarily pay costs outlined under section 152(2) of the Fair Trading Act however a number of Undertakings were not felt to be truly voluntary. Page 29 of 49 Undertakings are public records and will be posted on the AMVIC website under Enforcement Actions. Suppliers should be advised of this when an Undertaking is being offered. An Undertaking can be used once for a breach of the Act. Assessment 4 - That Administrative Actions Policy recognizes that AMVIC must maintain a public record of Undertakings. This is a requirement under Section 157.1 (1) of the Fair Trading Act. "Section 3.2.0 - Considerations An Undertaking should typically only be offered if the identified breaches have ceased and/or been resolved, and there is another enforcement or administrative option available if the supplier refuses to enter into an Undertaking. Undertakings can also be used to secure restitution for individuals who suffer a loss arising from a breach. The behavior of the business during the investigation should be considered when contemplating an Undertaking. If a supplier has refused to cooperate or amend their business practices, then an Undertaking will not generally be an appropriate recommendation?. ?Section 8 - investigation Costs When an Undertaking or Director?s Order is recommended, the recommendation may include a recommendation for government?s costs to be paid by the supplier under section 176. The rate for investigative costs can be found in the policy directive dealing with Undertakings at paragraph 1.2. Section 152(2)(d) of the Act provides the Director the authority to collect costs of investigating a person or supplier who has contravened the Act and the following costs should be considered when negotiating the assessed costs with the supplier: 1. Staff hours, as shown in the AMVIC data base, spent on an investigation are charged at the current hourly rate as approved by the Director. This includes investigative staff, administrative staff, department legal staff, travel time, meeting time, hearing time and any other time Spent by staff. 2. Costs of special and/or technical experts or witnesses (including evidence testing, expert opinions, and external legal opinions)." Assessment 5 - That Administrative Actions Policy recognizes that monies voluntarily paid to recover investigative costs are to be based on investigation time at a prescribed rate as approved by the Director. Page 30 of 49 b) Administration of Undertakinqs The Fair Trading Act provides significant authority to the Director (as delegated) to carry out Administrative Actions including Administrative Penalties, Directors Orders, Licensing Actions and Undertakings. In the case of AMVIC, this authority has been placed with the Executive Director of This role requires the assessment of recommendations made by AMVIC Investigators/Inspectors arising from occurrences brought forward to or investigated by AMVIC staff. The recommendations could include the pursuit of: a) specific charges under the Criminal Code of Canada, b) charges for contravention of provincial regulations or statutes 0) administrative penalties or suspensions, d) licensing action including refusal, stipulation of specific conditions, suspension or canceHa?on, e) Undertakings which could include monetary restitution to consumers and/or payment of AMVIC investigative costs. The ultimate decision in these matters rests with the Executive Director, who is the Director (as delegated), under the Fair Trading Act. The following diagram depicts current Organizational Chart and demonstrates the positional authority and Span of control afforded to the position of Executive Director of AMVIC. Page 31 of 49 Abena Motor Vehicle industry Comcit Mi Mi Assessment 6 - That AMVIC's organizational structure has the Executive Director reporting to and an employee of the Board that is composed of both laypersons and industry members. The entirety of AMVIC staff subsequently report to the Executive Director. The Executive Director has ultimate authority and direction of all Investigation, Compliance, Communications and Licensing Staff. Assessment 7 That by virtue of the authority under the Fair Trading Act. the Director (as delegated) is responsible for the independent and objective review of matters, conduct of hearings and administration of penalties arising from any and all Administrative Actions associated with AMVIC. In conducting this duty, the Director (as delegated) is bound by the applicable rules of evidence and the requirement to be both actually and perceptually unbiased. Page 32 of 49 DETERMINATIONS: 1) Throughout the course of reviewing Undertaking files and during the interviews conducted with Investigators it was determined that there are a number of occasions in which the AMVIC policy relating to Undertakings is not being followed. Specifically, Undertakings are not being issued at the conclusion of an adequate investigation that satisfies the existence of the contravention and in which the contravention has ceased. In fact there were occasions during the file review in which an Undertaking had been issued as a form of successive penalty due to non-compliance with prior warnings to cease the contravention. 2) In reviewing the Undertaking files, particularly in the case of advertising violations, it was found that the file contained only an advertisement, sometimes pulled from a newspaper and a very brief indication of a prior warning by AMVIC. Based on this, a standardized format letter and an Undertaking were subsequently issued. An example of the standardized letter (vetted for privacy) follows. May 12, 2014 PERSONAL 8. Attention: Mr's. Dear Sirs: RE: -Concern with Advertising We have identified an advertisement that you have placed in the Metro. Specifically, the May 9, 2014 edition has an ad (copy attached) where the advertisement does not include stock numbers and the prices stated do not include all fees. This advertisement contravenes the Automotive Business Regulation, Section 11 (2) The Fair Trading Act (section 152) has a provision for us to enter into an Undertaking- you undertake to no longer violate the Act and pay the investigation costs of reviewing this violation of the Fair Trading Act. Please: 1. Sign the enclosed Undertaking 2. Return it with the payment of $500. Please call or email Ashley Beland (780-466-1140, ext. 2223 or abeland@amvic.org) if you have any questions or if you wish to schedule a review within the next 30 days and present additional information regarding this matter. John Bachinski Director of Fair Trading (as Delegated) JBlab Encl. Page 33 of 49 Neither the investigation nor this correspondence demonstrates that the contraventions have ceased. A further request to cease in fact gives rise to the fact that AMVIC believes the contraventions have not ceased. Further, the mail delivery of an Undertaking and direction to "Sign the enclosed Undertaking and return it with the payment of $500.00? or call to schedule a review, would not satisfy "a reasonable man" that this Undertaking has been entered into voluntarily or upon negotiation with that person. It is also widely known throughout the industry that the ?review? would be conducted and adjudicated by the Director (as delegated), who has already issued both the letter and Undertaking. In another instance, the cover letter associated to the Undertaking indicated an amount of $400 and read as follows: September 24, 2013 PERSONAL CONFIDENTIAL Attention: Mr. Dear Sirs: RE: -Concern with Advertising We have identified a recent private invitation that you have issued. Specifically, the private invitation for September 19, 20, 21 and 22 (copy attached) does not disclose the cost of credit pursuant to the Cost of Credit Disclosure Regulation, Section 6. Advertising concerns have been raised with your store in the past as well. The Fair Trading Act (section 152) has a provision for us to enter into an Undertaking - you undertake to no longer violate the Act and accept a monetary penalty. Please: 1. Sign the enclosed Undertaking 2. Return it with the payment of $400. Please call or email Rhonda Varley (780-468-0475 or rvarley@amvic.org) if you have any questions or if you wish to schedule a hearing within the next 30 days and present additional information regarding this matter. John Bachinski Director of Fair Trading (as Delegated) Encl. The dollar amount indicated in the letter is not associated to investigation cost recovery. In fact it is identified as a ?monetary penalty?. The Fair Trading Act does not allow for the imposition of monetary penalties. Page 34 of 49