LIQUOR LICENCE ACT, R.S.O. 1990
In the Matter of: LEAO D’OURO RESTAURANTE 356 College Street Toronto, Ontario M5T 1S6
Licensee: 1428493 Ontario Inc.
Licence Number: 803523
Notice of Proposal: To SUSPEND a licence Dated August 14, 2006
The Proposal alleges that:
(a) Contrary to subsection 30.1(1) under the Liquor Licence Act, the licence holder failed to display the Fetal Alcohol Spectrum Disorder warning sign while selling or supplying liquor or offering to sell or supply liquor.
(b) Contrary to subsection 31(1)(c) of Ontario Regulation 719/90 under the Liquor Licence Act, the licence holder kept for sale liquor not purchased under the licence.
(c) Contrary to section 33(1) of Ontario Regulation 719/90 under the Liquor Licence Act, the licence holder permitted liquor other than liquor purchased by the licence holder under the licence from a government store to be brought onto the licensed premises or the liquor and food preparation area and storage areas.
(d) Contrary to section 52 of Ontario Regulation 719/90 under the Liquor Licence Act, the licence holder failed to post the licence in a conspicuous place in the premises to which the licence applies.
(e) Contrary to section 53 of Ontario Regulation 719/90 under the Liquor Licence Act, the licence holder failed to make available lists describing:
a) the varieties of liquor available for sale;
b) the amount of liquor in each type of drink offered for sale;
c) the varieties of non-alcoholic beverages available for sale;
d) the purchase price of the food, liquor and non-alcoholic beverages.
(f) Contrary to section 13 of Ontario Regulation 719/90 under the Liquor Licence Act (“LLA”), the licensed premises failed to have a partition of 0.9 metres distinguishing adjacent areas.
Hearing: Alcohol and Gaming Commission of Ontario 90 Sheppard Avenue East, 3rd Floor Toronto, Ontario M2N 0A4 February 16, 2007
Presiding Board Member: Beryl Ford, Member
Counsel for the Registrar: Joyce Taylor
Counsel for the Licensee: David Winer
Witnesses: Jade Leadbetter, AGCO Liquor Inspector Maria Santos-Mota, officer, director and shareholder of the licensee corporation Julio Santos, Manager of the establishment
Exhibits: #1 - LCBO and Beer Store Receipts #2 - Photos of the Establishments #1 To 10 #3 - Drink List
The Board of the Alcohol and Gaming Commission of Ontario (“AGCO”) held a hearing on February 16, 2007 pursuant to a Notice of Proposal dated August 14, 2006 to suspend the liquor licence issued to 1428493 Ontario Inc. (the “Licensee”), for premises operating as LEAO D’OURO RESTAURANT (the “Premises”), 356 College Street, Toronto, Ontario, M5T 1S6, licence number 803523.
Preliminary Matters
The Board ordered witnesses excluded from the hearing.
Ms. Taylor objected to the late disclosure of Licensee’s documents. After considering the objection the Board ruled that the collection of photographs, Exhibit #2, and drink list, Exhibit #3, were relevant and their admission would not prejudice the Registrar despite the Licensee’s failure to disclose them in accordance with the Board’s Rules.
Registrar’s Witness
AGCO Inspector Jade Leadbetter arrived at the Premises on June 2, 2006 for a routine liquor licence compliance inspection. Ms. Leadbetter noted that the large full length windows of the restaurant opened onto the street without any partition dividing the licensed area and the sidewalk. She advised the Manager, Mr. Julio Santos, that the LLA required a partition dividing the Premises from the street. Ms. Leadbetter testified she did not recall seeing a table in front of the window on that occasion or Mr. Santos’ response to the information you provided to him. Later in her testimony she stated that, had a table been in place, it would not have met the required 36 inch height of a partition as, in her estimation, the tables in the Premises were below that height. She further confirmed the Premises had received a written infraction in 2005 for not providing a partition between the premises and the street.
Ms. Leadbetter next asked Mr. Santos for the current Liquor Control Board of Ontario (“LCBO”) and Beer Store receipts for liquor purchased for the business. Mr. Santos produced a folder with multiple receipts inside and proceeded to flip through the receipts. Ms. Leadbetter observed that Mr. Santos was by-passing some receipts and formed the opinion he was attempting to hide some receipts. She asked to inspect the folder herself and Mr. Santos did not object. Ms. Leadbetter discovered receipts totaling $988.35 for liquor and beer bought “off licence” in the folder. These receipts were marked as Exhibit #1. Ms. Leadbetter stated the products identified on the receipts were brands of alcohol offered for sale in the Premises. Mr. Santos did not provide any explanation of the receipts and made no objection to Ms. Leadbetter taking the receipts for an investigation.
Ms. Leadbetter asked to see the liquor menu. Mr. Santos advised her that no liquor menu was available. The Fetal Alcohol Spectrum Disorder (“F.A.S.D.”) notice was not posted. Ms. Leadbetter advised Mr. Santos that the LLA required a liquor menu be available and the F.A.S.D. notice posted. She informed Mr. Santos the F.A.S.D. could be down loaded from the AGCO website.
Ms. Leadbetter could not locate the liquor licence. Mr. Santos produced the framed licence from a shelf where it had been shelved as a book and was not visible. Ms. Leadbetter advised Mr. Santos the liquor licence was required to be posted in a conspicuous place where it could be readily seen by all.
Ms. Leadbetter returned to the Premises on June 22, 2006 as a follow up visit. She again observed that the full length window was open and the required 36 inch high partition was not in place. On this occasion Mr. Santos advised he had placed a table in front of the window which he had marked reserved and not available for service. He thought that a table blocking the window would be sufficient until a permanent partition was in place. Ms. Leadbetter advised Mr. Santos this solution did not satisfy the LLA requirements and was not acceptable. She instructed Mr. Santos to close the windows until the partition was installed. Mr. Santos complied with her request.
In cross examination, Ms. Leadbetter confirmed she was aware the Premises did not have liquor licence for the area outside the windows and that she had suggested to Mr. Santos that a rope or barrier at 36 inch high dividing the licensed restaurant from the street would be appropriate.
Licensee’s Witnesses
Maria Santos-Mota testified she has held the liquor licence for the Premises for the past 6 years and that her brother, Julio Santos, is the Manager. She also owns another establishment with the same name in Mississauga. She further testified that there has never had any other infractions at her establishments.
Mr. Santos told her the Inspector had visited the premises and had asked for “certain things” some of which he had provided. He told Ms. Santos-Mota the Inspector had given him a business card with a list of required items, including the liquor menu and any other receipts, and requested they be faxed to her by June 9, 2006. During the week of June 8 Ms. Santos-Mota reminded Mr. Santos to fax the information to the Inspector as required. On June 8 Mr. Santos told her he had spoken to Ms Leadbetter on the telephone and had been given an extension until June 12 or 13.
Mr. Santos told Ms. Santos-Mota that the Inspector came again on June 22 and discussed the front windows. She testified that Mr. Santos was under the impression that if nobody was seated at the table in front of the windows it was okay not to have a partition. After Ms. Leadbetter’s second visit Mr. Santos purchased and attached a chain 36 inches high dividing the licensed area from the sidewalk.
Ms. Santos-Mota had no idea why the F.A.S.D. sign was not posted and had no recollection of it.
Mr. Santos buys the alcohol for the business he manages and purchases it on the liquor licence. Ms. Santos-Mota takes care of the food and kitchen area of the business. She testified that she and her brother sometimes provide a home/office catering service to selected friends and colleagues. They supply food and, when asked, will pick up liquor and beer from the LCBO and Beer Store and deliver it with the food. This was done strictly as a favour; they have no mark up on the alcohol and do not serve the alcohol. They keep the receipts and are reimbursed the cost of the alcohol by the client.
On cross-examination Ms. Santos-Mota admitted she does not have a catering endorsement on the liquor licence and stated that she was unaware such an endorsement was required. She further confirmed alcohol was supplied to the catered events but re-iterated there was no mark up on the liquor. She was not aware this was not permitted. Ms. Santos-Mota agreed the receipts (Exhibit #1) were not personal receipts but were for business purposes related to the catering.
She thought Mr. Santos had faxed the requested receipts to Inspector Leadbetter but agreed she had not seen a fax confirmation receipt and did not know who had written the list of items.
Mr. Julio Santos has been the Manager of the Premises for the past 6 – 7 years.
On June 2, 2006 the AGCO inspector visited the Premises. She asked to see the liquor licence and where the F.A.S.D was posted. She gave him information about the F.A.S.D. sign as he did not have one posted. Mr. Santos recalled the Inspector telling him about the requirement for a chain across the window as a partition between the licensed premises and the sidewalk to prevent people coming in and out from the street through the open windows which are ground level but not entry or exit doors. The inspector told him nobody should be sitting at the table. He placed a reserve sign on the table and took it out of service. The table in the photo of Exhibit 2 (#7) was in the same location in front of the window on June 2, 2006. The photos were taken recently for the purpose of the Hearing.
Ms. Leadbetter also asked to see the receipts for liquor and beer purchased. He told her that most of the receipts were with the accountant, but he kept a folder with “other business and personal” receipts on the Premises which he provided for her inspection. The Inspector took the file folder from him and removed some receipts for alcohol which was not purchased on the liquor licence. He explained that those receipts were for catering they did for friends and colleagues, he explained he would pick up the liquor and beer as a favour and deliver it with the food.
Mr. Santos testified he could not locate the drink menu when requested but normally has one available. He further testified the Inspector wrote a list on the back of her business card setting out what she required for compliance with the LLA. The list consisted of a drink list, receipts for 3 – 4 months of business, information on the web site for him to download the F.A.S.D information. Ms. Leadbetter requested these items be faxed to her by June 9 but advised that, if he required more time, to call her
Mr. Santos called the Inspector on June 9. He clearly remembers that day because it was his birthday and the World Cup was playing. He told her he needed more time to gather the information and she agreed. He faxed the information to Ms. Leadbetter the following Monday morning, June 12.
The inspector came back a few weeks later and spoke to him about the table again. She told him he could use the table if he bought a chain and installed it at the proper height. He complied with her request, installed a chain and put the table back into service.
Mr. Santos identified Exhibit #3 as the drink menu which is now readily available at the Premises.
Mr. Santos stated that the liquor licence is in a frame and usually stood on a shelf atop a cabinet where it is displayed for visibility (Exhibit #2 (5)). He stated that he can only assume whoever cleaned the shelf that particular day had inadvertently moved the liquor licence and replaced it on the shelf where it was not visible.
On cross-examination Mr. Santos confirmed the liquor was for catered events and he delivered it as a favour. Advised by Ms. Taylor that it was illegal to supply or deliver liquor for catered events without an endorsement on the liquor licence, Mr. Santos responded that he was not aware he was breaking any law and apologized for his actions.
Mr. Santos confirmed he had told the Inspector that the receipts were for catered events on June 2 and she had not responded to this information.
He testified he did not think it necessary to bring the inspector’s business card with the list on the back or the fax confirmation receipt for the material he had faxed to the hearing. Mr. Santos further testified he asked the Inspector on June 22 whether she had received the faxed information and her response was “if I hadn’t received it I would have come to see you already”.
Registrar’s Reply Evidence
Ms. Leadbetter testified that on October 24, 2006 an employee of the LCBO complained to the AGCO that the Licensee was making off licence purchases by using a credit card that collected “Airmiles”. On October 31, 2006, during an inspection of Ms. Santos-Mota’s Mississauga establishment, it was discovered Ms. Santos-Mota did not have the required Smart Serve certification. The Inspector requested liquor receipts be produced and, upon examination, two LCBO receipts in the amount of $565.80 for off licence liquor were disclosed.
The inspector submitted his report to his supervisor and a disposition was made for a provincial offences notice. On November 24, 2006 the charge package was delivered to Peel Regional Police Vice Unit. Inspector Leadbetter testified that she does not know if charges were laid, there is a statute of limitations of 2 years and it is possible that charges are still pending.
Ms. Leadbetter denied Mr. Santos had ever explained the off licence receipts were for catered events and stated had the conversation taken place, it would have immediately generated a further discussion on the lack of a catering endorsement on the liquor licence.
Ms. Leadbetter also denied ever discussing placing a table in front of the open window during the June 2 inspection. She agreed she could not recall if a table had been placed in front of the window on the first visit but stated it would be highly unlikely that she would issue a violation notice on June 22 if she had suggested that a table would meet the requirements for a partition on June 2.
Ms. Leadbetter said it was possible she left a list on the back of her business card. This is often her practice as a courtesy to the licensee. However she never asked that the items be faxed to her and did not receive any faxes from either Mr. Santos or the Licensee.
Submissions - Registrar’s Counsel
Counsel for the Registrar asked for findings under:
- Subsection 30.1(1) of the LLA
- Subsection 31(l)(c) of Ontario Regulation 719/90
- Section 33(1) of Ontario Regulation 719/90
- Section 52 of Ontario Regulation 719/90
- Section 53 of Ontario Regulation 719/90
- Section 13 of Ontario Regulation 719/90
In final submissions, Ms. Taylor asked the Board to consider that the F.A.S.D. requirements had been in place for almost two years. The posting of the liquor licence is a requirement that is mandatory and the explanation for the failure to post as required is not reasonable
The evidence with regards to the “off licence” liquor purchases was overwhelming. The explanation given was, again, not credible.
Evidence pertaining to the partition between the premises and the sidewalk was clear. The inspector had attempted to advise the manager of the Premises about correcting this violation by closing the windows or providing a barrier such as a rope to divide the licenced area from the street. The Inspector denied ever suggesting a table was acceptable as a barrier and it was not logical she would return on a second visit to issue a violation notice for compliance with her own suggestion.
Ms. Taylor further submitted that the Licensee had ample opportunity to provide the confirmation notice of any faxed materials and provide the business card that held information pertinent to the Hearing.
Ms. Taylor submitted that the credibility of the Licensee was in question when she denied having a violation and this was not true.
Submissions – Licensee’s Counsel
Mr. Winer submitted that the evidence of a table being a barrier and the disputed evidence that the Inspector had made this suggestion leave unanswered what, in fact, was the conversation between the Inspector and Mr. Santos on June 2, 2006. Why would a Licensee take a table out of circulation at a considerable cost to the business if this was not the expected solution for the partition.
With respect to the “off licence” purchases, the Licensee and Manager were credible in their evidence that the liquor was purchased as a service and favour for clients for whom they did some occasional catering business. Mr. Winer submitted that both Mr. Santos and Ms. Santos-Mota were surprised and remorseful to discover they had violated the LLA by doing so. It was never their intention to charge a service fee or mark-up on liquor for delivering or purchasing the alcohol. It was strictly done as a complimentary service to their customers and friends.
Decision
The Board FINDS a breach of subsection 30.1(1) of the LLA.
The Licensee admits the F.A.S.D. warning sign was not displayed. The requirement has been in place for almost two years. It appears to the Board that the Licensee was unaware of its obligation to post. It is the responsibility of a Licensee to be cognizant of requirements of the LLA and to comply with those requirements.
The Board FINDS a breach of section 52 of Ontario Regulation 719/90.
It was obvious during the June 2, 2006 inspection that the liquor licence was not posted as required. Upon request by the Inspector, the Manager went to a shelf and retrieved the liquor licence. It was impossible to see until pulled from the shelf. The Manager explained it usually ‘stood’ on the top of the shelf but was misplaced during cleaning. It is the responsibility of the Licensee to ensure that the liquor licence is posted in a place where it can be easily accessed and fully visible at all times and where mistakes such as the explanation offered by the Manager will not occur. It is naïve to suggest that standing it on a shelf is suitable. It is the opinion of the Board that the posting of the liquor licence is obviously not important to the Licensee and would explain why it was not posted on a wall in a conspicuous position.
The Board FINDS a breach of subsections 53(a) and 53(b) of Ontario Regulation 719/90. The Board DISMISSES the allegations of breach of subsections 53(c) and 53(d) of Ontario Regulation 719/90
The Board did not find Mr. Santos’ evidence he was requested to fax information to the Inspector following the first inspection credible. Given the importance of this allegation to their version of the events the Licensee and Manager, who were represented by experienced counsel, ought to have produced the fax confirmation receipt and the business card to support their evidence. The Board draws a negative inference from the failure to produce either the documents in question or a reasonable explanation for their absence. In the circumstances the Board prefers the evidence of the Inspector on this point.
A list describing the varieties of liquor available and the amount of liquor in each type of drink offered for sale was not available or produced to the Inspector. The Licensee conceded that the drink list was not available at the time of the inspection but was on a computer in the home office and not accessible at the Premises.
The Board heard no evidence that the Inspector requested the wine list or the food menu. Leao D’ouro Restaurante is an upscale restaurant and the Board is satisfied that a food menu and wine list, showing non-alcoholic beverages and purchase price for both liquor and non-alcoholic beverages, would be offered to a customer seated for service. In these circumstances the Board is not prepared to find a violation of ss.53(c) or (d).
The Board FINDS a breach of section 13 of Ontario Regulation 719/90.
After carefully considering the evidence, it is apparent to the Board that there was no partition dividing the licensed premises from the unlicensed sidewalk. The Inspector observed that the full length windows were open onto the street. She testified that there was no partition nor did she notice a table in front of the windows on her first inspection. At that time, the Board is satisfied she advised the Manager that a partition or barrier of a minimum of 36 inches high dividing the licenced premises from the unlicensed sidewalk was required in order to comply with section l3 of Ontario Regulation 719/90. She had no recollection of a response from the manager on why the partition was not in place on June 2nd 2006.
On June 22 the inspector re-visited the Premises and once again found no partition and the windows open onto the sidewalk. The Manager was advised again of the infraction. The Manager had placed a table in front of the window and placed a reserve sign on the table, effectively taking it out of service. He claimed to have taken this action on the advice of the Inspector. The Board does not accept this explanation as credible. The Board prefers the Inspector’s testimony as more reasonable and credible when she notes it would be highly unlikely she would return to issue a violation if she had advised the Manager that a table in front of the window was a sufficient barrier. Further, the Board notes that after the second inspection the windows were closed until a dividing rope was installed.
The Board FINDS a breach of section 33(1) of Ontario Regulation 719/90.
The Board accepts the evidence that “off licence” liquor was purchased and brought onto the licensed premises of the liquor and food preparation area and storage areas of the Premises. The receipts contained in Exhibit #1 establish conclusively that alcohol was purchased “off licence”. Neither the Manager nor the Licensee deny this but seek to explain it as a favour to friends for whom they were providing catering services. The Board rejects Mr. Santos’ testimony that he explained this to the Inspector as not credible. The Board finds it inconceivable that an AGCO inspector would not act on information that a Licensee was providing liquor as part of a catering service without a catering endorsement on the licence and at the same time purchasing and delivering liquor to those catered functions.
The Board DISMISSES the alleged breach of subsection 31(1)(c) of Ontario Regulation 719/90.
The Board accepts the evidence of Ms. Santos-Mota that the receipts for off licence alcohol found in the Premises on June 2, 2006 were related to the catering service she operated. Ms. Santos-Mota willingly and without hesitation told the Board that she provided a catering service and knew that alcohol was picked up from the LCBO and Beer Store to be delivered with food for clients. This was an obvious admission against interest and the Board finds Ms. Santos-Mota was genuinely surprised when told by Registrar’s Counsel that she was violating the LLA by providing alcohol to catering functions without a catering endorsement on the liquor licence and delivering alcohol without a delivery service licence. She explained she considered the catering business was for friends and close contacts and the purchasing and delivering the alcohol was a favour and courtesy she provided for these individuals.
As a Licensee, Ms. Santos-Mota should have been aware of the regulations of the LLA. There is no question she was naïve as to her responsibilities as a licensee. However, while she may well be in violation of other provisions of the LLA and its regulations the Board is not satisfied the Licensee, on these facts, has violated ss.31(1)(c) of the O.Reg. That subsection requires a licence holder to “keep for sale, sell and serve” only liquor bought from a government store and purchased under licence. There was no evidence to suggest that the alcohol purchased “off licence” was offered for sale in the Premises. The evidence of the Licensee, which was not seriously challenged, was that the liquor purchased off license was intended exclusively for the catering customers. The Board accepts this alcohol was purchased and taken off site as described by the Licensee. While the Licensee was reimbursed for the liquor purchased, and to that extent might be said to have engaged in a sale even without mark up or commission, a plain reading of the subsection requires that a licence holder both sell AND serve the alcohol before the provisions of the regulation are brought into play. The evidence does not support finding the Licensee sold and served the off licence alcohol at the catered events.
Conclusion
Having made the above findings, the Board invites written submissions on sanction from the respective parties. Counsel for the Registrar shall serve and file her submissions within fourteen (14) days of the date of this decision. Counsel for the licensee shall serve and file his submissions within seven (7) days of receipt of the counsel for the Registrar’s submissions. Counsel for the Registrar shall have an additional three (3) days for a reply, if any.
DATED AT TORONTO THIS 28th DAY OF MARCH, 2007.
BERYL FORD, BOARD MEMBER
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