OMVIC panel finds Yeung's Auto Imports and Xiang Zhang kept a deposit taken with no contract and did not answer OMVIC's requests for records; penalty still to be decided

In late October 2023, a customer at Yeung’s Auto Imports Inc. in Ottawa handed over cash so he could test drive a 2014 Honda Civic hybrid. The car would not stay running, he asked for his money back, and the dealer kept it. In a merits decision dated September 15, 2026, an OMVIC Discipline Tribunal panel chaired by Sherry Darvish found that the dealer breached section 38 of O. Reg. 333/08, the rule that a deposit given before any contract must be returned immediately on request. It also found that the dealer and Xiang Zhang, its sole director, sole registered salesperson and person in charge, breached the Code of Ethics, including by not answering OMVIC’s requests for records. No penalty has been set. The panel will receive submissions on what penalty order, if any, is appropriate ([52]), so this matter is not finished.

The hearing was contested and ran over three days by videoconference, May 11, 12 and 28, 2026, under s. 17 of the MVDA. Zhang represented himself and the dealer. He admitted the two paragraphs of the Notice of Referral to Discipline (NORD), dated August 1, 2025, that set out the registration history, and denied the rest ([2] to [4]).

Cash for a test drive, and no paperwork

The customer found the car through the dealer’s Facebook advertisement: $3,000, sold “as is”, with a hybrid inverter problem noted ([13]). The panel later relied on that advertisement, which also said a Honda dealer had diagnosed the problem and quoted $4,000 to repair it ([29]). The car sat behind a locked gate. The customer’s evidence was that he handed over his cash to show he was serious, on the understanding that he would take the car if the test drive went well ([13]). The car needed a booster pack to start and stalled without it, so there was no test drive ([14], [29]). No bill of sale was signed, no receipt was issued and no identification was exchanged ([15], [33]).

The NORD put the amount at $2,800. Zhang’s evidence was that the customer only had $2,780 and asked for a $20 discount, and the panel accepted that $2,780 was what the customer paid ([23]). The panel’s formal findings at [50] still write $2,800, while its analysis at [34], [36] and [48] uses $2,780.

Zhang’s position, repeated through the hearing, was that the money was full payment for the car and not a deposit, that the customer had bought the car and then refused to complete the paperwork, and that he had abandoned it ([27]). Ministry of Transportation records showed the dealer sold the same Civic to someone else in November 2023, a few weeks later ([10], [31]). Asked about that sale on cross-examination, Zhang would not answer, and the panel drew an adverse inference ([27], [49]).

Why the money was a deposit

Section 38 applies when a customer who is not a registered dealer gives a dealer a deposit before entering into a contract, then asks for it back before entering into the contract. The dealer “shall immediately return the deposit”. Zhang suggested the customer might himself be in the trade, but no evidence showed he was a registered dealer, so the section applied ([32]).

The panel found that no contract had been formed. Nothing was signed or written down, and on Zhang’s own account further steps remained, including identification, a bill of sale and more money ([33]). “A transaction that requires further steps for completion is not a completed contract” ([34]). It then found the money was a deposit, because its only purpose was to secure the customer’s interest in the car and let him test drive it, and because Zhang himself said amounts were still outstanding ([36]). The panel added that the customer had not defaulted: the dealer could not complete the sale because the car did not work ([37]). “Where there is no contract, the Act is clear that the consumer’s money shall be returned on demand” ([38]).

An OMVIC investigator had put the same point to Zhang in writing. A letter sent on or about June 25, 2024 told him that section 38 required the money to be returned in the absence of a signed agreement ([9]).

The requests for records

On September 10, 2024, OMVIC’s complaints department sent the dealer a section 14 letter asking for an explanation, the wholesale and retail bills of sale, a deposit receipt and any correspondence with the customer, due September 17 ([17]). It followed up on September 24 and 30. Zhang’s replies asked for the customer’s full contact details and home address and did not produce any of the records ([17], [45]). He testified that he did not know the customer’s name until OMVIC served its hearing documents, which the September 10 letter contradicted, because it named the customer ([28]). At the hearing he still maintained that neither he nor the dealer had to give OMVIC anything until he got the information he wanted ([45]).

Section 14(3) of the MVDA requires a registrant who receives a written request for information about a complaint to provide it “as soon as practicable”. The panel found both respondents failed to comply, and treated that failure as a separate breach of s. 9(1) of the Code of Ethics, apart from the dealings with the customer ([45], [46]).

What the panel found, and what it did not

Against the dealer ([50]): a breach of section 38, and through it of Code ss. 9(1) and 9(3); and a breach of s. 9(1) for failing to comply with the requests for information.

Against Zhang ([51]): breaches of Code ss. 8(2), 9(1), 9(2), 9(3) and 9(4) in his dealings with the customer, and breaches of ss. 6(2) and 9(1) for the failure to answer OMVIC, which the panel treated as his failure, as person in charge, to ensure the dealer complied ([47]).

The NORD also alleged the dealer breached s. 3(1), the integrity section. The panel dismissed that allegation: the dealer was unprofessional, but there was no evidence of a lack of financial responsibility or of missing records, policies or procedures ([41]).

A physical altercation followed the refusal to return the money. The two accounts of it conflict, and the panel declined to resolve them. It found only that both men were involved, as both admitted, and that the altercation arose from the dispute over the money at the dealer’s premises. Whether there was an assault, and who started it, were not matters before it and it made no finding on either ([30], [42]). Zhang’s participation in the altercation, together with the refusal to return the money, is what the findings against him rest on ([43]).

The panel read the section 9(1) terms as a spectrum of misconduct ([48]). It found the respondents “intentionally kept both the consumer’s money and the vehicle” and held that the conduct rose to the threshold of disgraceful and dishonourable ([49]). It has not yet heard submissions on penalty. The parties had 10 business days from receiving the reasons to say whether they want a further oral hearing or written submissions ([52]).

The rule a candidate should take from this

Zhang called the money the full price. The panel looked instead at what the money was for and whether a contract existed when the customer asked for it back. Where a customer hands over money to secure a vehicle before a contract is signed, section 38 is engaged, and the money is returned on demand ([38]). The same rule was one of the failures behind the $7,000 fine against Auto Find, which kept a $2,000 deposit under a “Sourcing Agreement” that called it non-refundable, with no completed contract to buy or lease a vehicle. The guide to deposits and the lack of a cooling-off period covers what changes once a contract is signed. Deposits and the duty to answer OMVIC sit in the contracts and inspections and discipline practice sections.