FIRST, HAPPY NEW YEAR TO ALL! Wishing you a healthy and prosperous 2022.

We expect we are not alone in hoping for some real changes this year after almost two years of the pandemic. In this article we will discuss some significant changes in store in the world of towing, which are sure to impact dealers and consumers alike.

Over the past couple of months you may have seen signs on some 400-series highways referring to "restricted tow zones". These zones are part of the Tow Zone Pilot Project introduced by the Ministry of Transportation, which mandates that only authorized tow companies on contract with the Ministry of Transportation can tow vehicles on stretches of the 400-series highways.

The Tow Zone Pilot Project, in turn, is part of Ontario's broader plan to increase oversight of the towing industry in general, and to protect consumers who engage tow services. The main way the province intends to do this is through the Towing and Storage Safety and Enforcement Act, 2021, S.O. 2021, c. 26, Sched. 3 ("Towing Act”).

The Towing Act was enacted as Schedule 3 of the Moving Ontarians More Safety Act ("MOMS Act"), a broader legislative package intended to increase road safety in Ontario by increasing penalties for dangerous driving, protecting more vulnerable road users, such as pedestrians and highway workers, and improving commercial-truck safety, among other things.

The MOMS Act is being rolled out in stages, with the first stage having come into force on July 1, 2021. The Towing Act was tabled in response to "concerning road safety trends" including "growing violence, criminal activity and consumer protection issues in the towing industry". Of specific concern were tow truck "turf wars", which have seen cases of arson, extortion, drug trafficking, and even murder plaguing the industry.

The Towing Act, the Tow Zone Pilot Project and a Joint Forces Operating Project (which is a provincial towing task force), are three of the main ways the Province intends to clean up the towing industry and better protect consumers.

On June 3, 2021, the MOMS Act and Towing Act received Royal Assent and await a date to be put into force. Certain provisions, such as those relating to restricted tow zones, are already being rolled out through the Tow Zone Pilot Project.

We will not attempt to outline each provision of the Towing Act, but provide a high-level overview and some commentary on the more salient provisions.

REQUIREMENTS UNDER THE ACT

The Towing Act will have wide-ranging effects on the towing and storage providers' operations, the primary effects being increased oversight and regulation of the towing industry.

For instance, the Towing Act includes requirements on disclosure, fee scales, and authorizations, which will complement the requirements already in place for these matters under the Repair and Storage Liens Act ("RSLA") and the Consumer Protection Act ("CPA"). The provisions of the Towing Act will add another layer of protection by providing clarity and ensuring minimum standards for all tow operators.

The most significant change created by the Towing Act will be the requirement for tow operators, tow truck drivers and vehicle storage operators to be licenced under ss. 2, 3 and 4 of the Act. Like with car dealers and automotive salespersons, licensing will help ensure that tow truck operators abide by certain standards designed to protect consumers.

Under s. 2(1), no person will be able to provide or offer to provide towing services, or hold themselves out as a tow operator, unless they have a valid tow certificate. Under s. 3, no person will be able to drive a tow truck to provide towing services, or hold themselves out as a tow truck driver, unless they have a tow certificate.

Under s. 4, no person will be able to provide or offer to provide vehicle storage services, or hold themselves out as a vehicle storage operator, unless they have a vehicle storage certificate.

A "tow operator" is defined in the Towing Act as "a person who, directly or indirectly, alone or with others, operates, manages, supervises, runs or directs the offer of or provision of towing services" and a "tow truck driver" is defined as "a person who drives a tow truck for the purpose of providing towing services”.

A "vehicle storage operator" has the same definition as a tow operator, but with respect to storage services. These all-encompassing provisions leave no room for anyone to provide tow services without the requisite authorization.

THE MOTOR VEHICLE DEALERS ACT FOR TOW PROVIDERS?

Eligibility

The Towing Act does not stipulate what the requirements for a towing or storage certificate will be – this will be addressed by the regulations under the Towing Act and in any standard form applications released by the Ministry of Transportation, neither of which are currently available. It is likely, however, that the requirements for a certificate will align with the Motor Vehicle Dealers Act ("MVDA")'s requirements for registration as a dealer or salesperson given the intent of both Acts.

The MVDA and the Towing Act are consumer protection statutes that establish oversight of their respective industries. We can expect a similar requirement as under the MVDA that each licenced person or entity complete an application, undergo a background check, disclose previous charges or convictions under any law, demonstrate financial responsibility, and generally satisfy the Registrar (or, in this case, the Director of Towing and Vehicle Storage Standards) that they will carry on business with honesty, integrity, and in accordance with the law.

Powers to issue, revoke, etc.

While the specific requirements to be eligible for a licence are not yet known, the Towing Act grants the Director certain powers similar to those under the MVDA with respect to the issuing and revocation of licences. Section 6 of the Towing Act allows the Director to attach conditions to a licence, ss. 7 and 8 allows the Director to refuse, suspend or revoke a licence, and s. 9 allows a person to appeal a decision by the Director to refuse, suspend or revoke a licence.

Practices, Inspections and Penalties

Once licenced, tow and storage operators will be required to maintain certain standards of equipment, maintenance, and record-keeping, as well as follow certain requirements with respect to estimates, invoices, charges and providing access to vehicles (see ss. 11-37 of the Towing Act).

Sections 53 and 54 of the Towing Act allow for inspections of tow trucks, business premises, and even a residence (with the consent of the occupier). These provisions mirror the inspection powers under section 15 of the MVDA.

Administrative penalties may be imposed under s. 45(1) of the Towing Act, and an administrative penalty may be appealed under subsection (7). Under s. 45(10), the maximum administrative penalty on a person contravening the Towing Act is $100,000.

The Towing Act also sets out offences and monetary penalties, similar to s. 32 of the MVDA. The penalties vary according to the nature of the offence, but begin at $250 to a maximum of $50,000, and a six-month term of imprisonment for individuals, and a maximum fine of $100,000. In comparison, the maximum fine for an individual under the MVDA is $50,000 and a prison term of two years, and the maximum fine for a corporation is $250,000.

Enforcement

What remains to be seen is how stringently the Towing Act will be enforced. A new set of rules has no power unless its provisions are enforced by the prescribed ministry. Assuming the Towing Act is brought into force in the near months, it will come into force at an interesting time for Ontario's motor vehicle landscape. The Office of the Auditor General recently completed a report on OMVIC, which found that, among other things, OMVIC underperforms in protecting consumers and does not resolve consumer complaints in an effective or efficient manner.

We have found through our work in recent months that OMVIC is taking a harder stance against dealers and salespeople with respect to alleged breaches of the MVDA, in anticipation of and in response to this audit. With OMVIC's harder stance and the new Towing Act, Ontario clearly has a renewed interest in protecting, or appearing to protect, consumers who purchase vehicles and have their vehicles towed and stored.

While there are resources and political will to enforce the MVDA more stringently, the Towing Act will need to be given similar resources to have real impact and effect. To adequately enforce the Towing Act, there will be a need for additional staffing of inspectors, registration officers, and prosecutors, to name a few.

With the new threshold requirement of certification, we anticipate seeing fewer overall tow operators, but rather a group of larger operators with a greater share of the tow services available to consumers in Ontario. This may very well change the current tow industry landscape and rid the roads of some of the bad eggs.

Historically, some tow operators flouted the RSLA and CPA without consequence. Now an administrative authority exists to address consumer concerns with respect to tow operators, which should, in theory, resolve consumer complaints more effectively and efficiently should any arise. The introduction of the Towing Act will also redirect disputes away from the ever-backlogged Small Claims Court toward a more specialized authority.

Consumers should have more peace of mind when hiring a tow operator on contract with the province on certain highways, as well as more confidence that their interests will be protected when they engage any tow operator once the Towing Act is in force. Measures already taken such as the Tow Zone Pilot Project, while reducing choice for the consumer, serve to mitigate some of the main concerns that the Towing Act addresses.

Overall, the changes already in effect, and those coming down the road for the tow industry, are welcome, but only if they can be adequately staffed and fairly enforced by the Ministry of Transportation. For staffing, the Ministry of Transportation should be prepared for a surge of applicants for licensure; hopefully they will not be in for a long wait, as many OMVIC applicants are.

We are interested to see how Ontario administers its new towing authority at a time of heightened concern around consumer protection. Based on a review of the Towing Act, it appears that the government has brought tow operators and drivers into a group very similar to motor vehicle dealers. Whether this makes sense or is necessary is a question for an entirely different article.

Originally published by The Ontario Dealer magazine.

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.