The Saskatchewan government has requested comments on the
proposed overhaul of its consumer protection regime. As part of the
changes, the Motor Dealers Act (the "Old
Regime") would be repealed and replaced by The Consumer
Protection and Business Practices Act and the Vehicle
Dealers Regulations (collectively, the "New
Regime"). Companies who sell or lease, or offer to sell or
lease, various types of vehicles should be aware that their
licensing obligations may change.
The Canadian Finance & Leasing Association (the
"CFLA") and other authors have noted concern about the
scope of the proposed licensing requirements. Under the New Regime,
a "dealer" is a person carrying on the business of a
dealership or who holds himself or herself out as a dealer. A
"dealership" is a business that: (i) sells or leases
vehicles or offers vehicles for sale or lease; (ii) solicits orders
for the future delivery of vehicles; (iii) takes vehicles on
consignment; or (iv) advertises the selling, leasing or consignment
of an interest in a vehicle. Any material increase in scope would
come from the inclusion of leasing activities, which were not
regulated under the Old Regime, and which may result in the
regulation of more businesses, such as fleet lessors. Most other
activities under the definition in the New Regime were already
caught by the Old Regime.
While the New Regime may appear expansive at first blush, one
should note that a person must be carrying on business as a dealer
before requiring a licence. Also constraining the licensing
requirements is an exception for a person, other than a wholesaler,
who only sells vehicles directly to dealers; a
"wholesaler" is a person "in the business of buying
vehicles to sell exclusively to dealers." Between these
narrowing considerations, it appears unlikely that, lessors aside,
a torrent of new licensing requirements will follow the changes.
For example, lenders selling vehicle collateral should not be
caught by the licensing requirement, especially if they only sell
to dealers; they are selling vehicles as part of a lending
business, not as part of a dealership or wholesale business.
Similarly, asset purchase agreements between two commercial parties
are unlikely to be caught; the one-off sale of assets between
commercial entities does not rise to the level of carrying on the
business of a dealer. However, additional narrowing clarifications
to this extent would be welcome.
Another factor circumscribing any perceived expansion of the
licensing requirements is the similarity between the New
Regime's definition of "vehicles" and the Old
Regime's definition of "motor vehicles." The
substantive content of the two definitions is very similar. Both
concern self-propelled vehicles used on highways and include
Perhaps of greatest concern are the expansive and uniform
regulations imposed on all dealers, regardless of the specifics of
their business (i.e. the New Regime appears to be a blunt
instrument). The New Regime requires, among other things, that
security of at least $15,000 be posted to secure a licence, that
mandatory warranties for used vehicles be provided, and that deals
be voidable if dealers fail to provide prescribed disclosure. The
CFLA has recommended that not all dealers be regulated in the same
Aird & Berlis LLP will continue to keep you updated on these
evolving regulations which may impact your business. We hope that
the ongoing consultation process will result in a more nuanced
regime appreciative of the different businesses caught by these
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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