Automotive News Canada - August 2016 - 5

* AUGUST 2016

Dealer pays for rolling back
odometers on 39 vehicles

Loans manager awaits
sentencing for hit and run
with demonstrator car
By ERIC FREEDMAN
LEGAL CORRESPONDENT

Defendant barred for
life from selling cars in
B.C.; said he had to do
it to be competitive
By STEVE MERTL
VA N C O V E R C O R R E S P O N D E N T

VANCOUVER - British
Columbia's Vehicle Sales
Authority (VSA) has banned
auto dealer Arthur Tong from
doing business for life and
warned the public about him
after more than three dozen
vehicles he sold were found to
have rolled-back odometers.
In a decision released in
early July, the VSA also cancelled the registration of Delta
Well (Canada) Ltd., doing business as New Star Motors with

locations in suburban Delta and
Richmond, for violations of the
B.C. Motor Dealer Act.
Delta Well's registration was
suspended after a November
hearing that followed a consumer complaint and inspection by
a compliance officer. An investigation revealed Tong had rolled
back the mileage on 39 vehicles,
or 85 per cent of sales over one
year. He sold some outside while
posing as a private seller.
Tong and Delta Well bought
back four vehicles for $60,000
and paid $58,000 in compensation to 26 other buyers. Nine
customers who did not respond
to VSA letters have not been
compensated.
Tong argued he needed to
continue selling vehicles in
order to make money to compensate the duped buyers. But a fur-

ther hearing in April resulted in
the decision to force him out of
business for good.
Tong previously was ticketed
for a 2013 complaint of a rolledback odometer where he argued
a replacement unit was improperly set.
The latest incidents involved
replacing odometers or digital
manipulation of existing units.
Tong blamed the high cost
of reconditioning the vehicles
for a need to extract more profit by portraying them as having
lower mileage.
In his ruling, registrar Ian
Christman observed Tong did
not seem remorseful after being
caught cheating, arguing it was
necessary to stay competitive.
"The clear impression was
this was a business issue,"
Christman wrote. - ANC

MAZDA'S
PUZZLE
With a solid product portfolio, it makes
little sense that sales are down, but
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By STEVE MERTL
VA N C O U V E R C O R R E S P O N D E N T

IN WHAT'S SHAPING UP TO BE ANOTHER
record year for auto sales in Canada, Mazda
Canada is an outlier.
The long-established Japanese
brand's sales volume dropped 1.2
per cent in the first six months
David Klan, senior director of sales,
of 2016, compared with the
marketing and regional operations
for Mazda Canada, acknowledges flat
SEE MAZDA PAGE 6
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THE FORMER LOANS MANAGER of an Edmonton dealership faces sentencing for the
2012 death of an 18-year-old
mother in a hit-and-run collision while he was driving his
demo, a Dodge Charger, at 3
a.m.
After a non-jury trial,
Justice Adam Germain of the
Alberta Court of
Queen's Bench
convicted Kenneth
Didechko of leaving the scene of
the accident and
obstruction of justice in the incident.
In his decision, Germain
wrote that "modern technology has
changed the way
in which police investigate
crime," noting that authorities
used GPS and cell phone communications system towers to
prove their case.
Didechko, who worked at
Southtown Chrysler at the
time, falsely reported that the
car had been stolen before the
incident.
However, the judge acquitted Didechko of dangerous
driving causing death, finding insufficient proof of that
charge despite "some evidence" of drinking, speeding
and using his cell phone just
before the collision.
The maximum possible sentence is life imprisonment for
leaving the accident scene and
10 years for obstruction of justice, a prosecution spokesman
said.
Didechko's defence lawyers
didn't respond to requests for
comment.

AUTO-ACCELERATION LIKELY
A Chevrolet store in

Kapuskasing, Ont., must pay
$19,642 in damages for breach
of implied warranties on a
2009 GMC Sierra Duramax
it sold, an Ontario Superior
Court of Justice judge has
ruled.
Seven months after Andre
Marcil bought the new truck
at Eastview Chevrolet-BuickGMC, it suddenly auto-accelerated to 150 km/h before Marcil
could slow it down. The incident occurred on a hunting
trip in northern
Ontario when the
Sierra had 15,000
kilometres on it.
Marcil refused
to drive it again,
the suit alleged.
Eastview
Chevrolet was
unable to identify the cause of the
one-time malfunction and couldn't
find another 2009
Sierra to replace it. As a
result, Marcil bought a 2011
model with fewer accessories
from the store.
In her decision, Judge
Louise Gauthier said, "The
only reasonable conclusion to
be drawn from the evidence
is that, although there was no
evidence of the cause of the
defect, the event could only
have occurred as a result of a
defect in the vehicle."
"The defect emerged in the
course of the ordinary use of
the vehicle. It also emerged
when the vehicle was still
quite new. And there was no
conduct on the part of Marcil
that could account for the
event," she said.
The decision overturned a
small-claims-court ruling in
the store's favour.
The amount of damages
was the difference between
what Marcil paid for the
replacement vehicle and the
value of options not included
in the replacement. - ANC

$1 billion suit alleges Ford Canada conspired to block sales of cheaper cars into U.S.
By ERIC FREEDMAN
LEGAL CORRESPONDENT

FORD MOTOR CO. OF CANADA MUST
defend a class-action suit accusing it of
illegally conspiring to violate antitrust
laws, an action that impeded the export
of lower-priced Canadian vehicles to the
United States.
The California Court of Appeal unanimously ruled July 5 that the plaintiff consumers produced enough evidence for
trial on their claims, which arise from
industry efforts to reduce grey-market
imports of vehicles to the United States
in the 1990s and early 2000s.
The suit on behalf of California residents, who bought or leased new vehicles
between 2000 and 2003, seeks to recover
the difference between what they paid
and what the lower price would have
been without the alleged antitrust violations, said plaintiffs' lawyer Michael
Christian of San Francisco.
For example, a 2000 F350 Lariat Crew
Cab 4x4 "could be imported from Canada
and sold at a price $8,265 less than its
U.S. counterpart," the suit claimed.

TWO-TIERED SYSTEM
The differential is the result of what
the plaintiffs claim was a "two-tiered
pricing system" in which automakers
typically charged California dealerships
10-30 per cent more for vehicles than they
charged their Canadian dealerships."
Changes in trade policy had made it
easier and cheaper for Canadian dealerships to export from Canada into
the United States, and "the currency exchange rate differential between
the strong United States dollar and the
cheaper Canadian dollar made export
sales increasingly attractive," the suit
alleged. "In the face of this mounting
activity by exporters, the manufacturer defendants illegally agreed that they
would all hold firm, each doing their part
to stamp out Canadian exports, rather
than taking the profits available by permitting their Canadian dealers to sell
Canadian cars freely into the U.S. market."
The suit accused manufacturers of
blacklisting exporting dealerships, modifying franchise agreements to forbid
export sales, imposing vehicle allocation

The suit references a 2000 Ford
F350 Lariat Crew Cab (F250 shown)
that sold for $8,265 less than in the
United States.
restrictions, terminating exporting dealers, voiding warranties and refusing to
inform exporting dealers about recalls.
The Court of Appeal found insufficient evidence to reinstate antitrust conspiracy claims against Ford Motor Co. in
the United States, and said there was no
evidence that would allow a reasonable
juror to conclude that it participated in
the alleged conspiracy.

OTHER CHARGES SETTLED
Antitrust claims against other U.S.

and Canadian automakers, the Canadian
Automobile Dealers Association (CADA)
and the National Automobile Dealers
Association had already been settled,
dropped due to the General Motors and
DaimlerChrysler bankruptcies or dismissed.
The appeals panel said the plaintiffs
"produced significant evidence of telephone and in-person meetings among
the manufacturers" - including Ford
Canada's general counsel - "aided by
CADA, the express purpose of which
was to come up with a joint approach to
stamping out the grey market export of
Canadian vehicles to the U.S."
The decision leaves Ford Canada as
the sole remaining defendant.
The plaintiffs estimated the financial
damages at $1.073 billion, the court said.
The impact of the alleged conspiracy was
greatest in California because it is the
country's largest market for new vehicles.
Ford Canada spokesman Matt
Drennan-Scace said the company could
not comment on pending litigation.
- ANC

Table of Contents for the Digital Edition of Automotive News Canada - August 2016