ALCOHOL AND GAMING COMMISSION OF ONTARIO
IN THE MATTER OF The:
Liquor Licence Act, R.S.O. 1990, c. L.19, as amended
B E T W E E N:
Registrar, Alcohol and Gaming Commission Ontario Registrar
-and-
Lai Jing Ltd. O/A House of Wong Licensee
DECISION
Panel: Patricia McQuaid, Vice-Chair Eleanor Meslin, Member
Decision Date: June 26, 2007
Hearing Location: Toronto, Ontario
Alcohol and Gaming Commission of Ontario 90 Sheppard Avenue East, Suite 300 Toronto ON M2N 0A4 Phone (416) 326-0366 Fax (416) 326-5566 Website: www.agco.on.ca
Appearances
Registrar, Alcohol and Gaming Commission ) Phillip Morris, Representative Lai Jing Ltd., Licensee ) Tip Lin, Representative
Allegations
- A hearing into a Notice of Proposal dated March 5, 2007 to revoke liquor licence number 20422 (the Licence) issued to Lai Jing Ltd., operating as House of Wong, 4601 Kingston Road, Scarborough, ON, M1E 2P3, on the basis that the licence holder would be disentitled to a licence under section 6 of the Liquor Licence Act (LLA) and that the licence holder is in breach of a condition of the existing licence, was held on June 12, 2007 in the City of Toronto.
Preliminary Matters
- Mr. Lin, Representative for the Licensee, was sworn in as a translator for Tsui Chen, the sole shareholder of the licensee.
Decision
- After considering all of the evidence and submissions, the Board makes findings of violations pursuant to subsections 6 (2)(a), (d), and (f) of the LLA and orders the liquor licence revoked.
Registrar’s Evidence
Douglas Stirrup is a field collection officer with the provincial Ministry of Revenue and as such reviewed the accounts of the licensee and visited the licensed premises in an attempt to resolve the non-compliance matters with respect to the filing and submission of taxes, including the retail sales tax. Mr. Stirrup reviewed the licence holder’s account in detail and summarized the various transactions.
Exhibit 1, the retail sales tax package, in particular, Schedule A, is a summary of what has occurred on this account.
The licence holder opened for business on April, 1994. In November, 1997, it went into default for the first time. Mr. Stirrup has calculated that between September, 1997 and April, 2007, there was a requirement to file eighty monthly retail sales tax returns. Of those 80, 76 were filed late and 67 were filed without payment. Twenty-two of the payments received were non-negotiable. The last negotiable payment received was on February 5, 2007, to address arrears. Prior to this, a payment was received on December 15, 2006 in the sum of $1400.00.
As of June 12, 2007, the net account balance owing is $55,865.71. A memorandum of understanding (MOU) was entered into with the licensee in February, 2006. At that time, between $49,000 - $51,000 was owing on the account.
The MOU was not complied with. The February return, due March 23, was not filed. The MOU required that the licensee pay $1500.00 per month, and that all filings be made on time and with payment. The Ministry of Finance, given the record of non-compliance, is not prepared to enter into another MOU with the licensee.
Further, since issuance of the Notice of Proposal on March 5, 2007, no returns have been filed nor any payments on account made.
On cross-examination, Mr. Stirrup did indicate that the Licensee has paid over $2.6 million since 1994. That amount, as well as the amount outstanding, would include retail sales tax, penalties and interest. Penalties and interest, under the Retail Sales Tax Act, become part of the debt and are not differentiated within the debt owing. Amounts received are applied to the total debt owed. Mr. Stirrup advised, in response to Mr. Lin’s statement that food sales at the establishment were the most significant part of the business, that the Ministry does not calculate, separately, the amount of tax attributable to food or liquor sales.
Mr. Lin, at the conclusion of the Registrar’s evidence, indicated that the Licensee conceded the facts as stated by Mr. Stirrup. No witnesses were called by the Licensee.
The facts, therefore, were not in dispute. The issue before the Board was that of disposition.
Submissions
Mr. Morris stated that based on the facts which are not in dispute, and in particular, the Licensee’s conduct since the MOU was signed in 2006, the Registrar was seeking a finding under subsections 6(2)(a), (d) and (f) of the LLA and consequently, an immediate revocation of the licence. The Registrar is not seeking a finding of a breach of condition of the licence as alleged in the Notice of Proposal.
Mr. Lin submitted that while, from the government’s perspective, the Licensee’s actions were inexcusable, this is an unsophisticated and essentially honest Licensee. He proposed, alternatively, that the Licensee be given six months to advertise the business for sale, during which time the Licensee will submit payments of $400.00 per week to show its goodwill. The hope is that the Licensee would secure a sale of the property or enough money to pay off the outstanding debt.
Mr. Morris advised that this was not a proposal that the Ministry of Finance can support.
Reasons
The retail sales taxes which the Licensee is obliged to submit are essentially trust funds. These are not a Licensee’s funds to allocate as it deems appropriate. There is an unfortunate history of compliance with the Retail Sales Tax Act both in terms of filing returns on time and with payment. Particularly telling for the Board is the fact that an effort was made to resolve the issue of the monies owing through an MOU between the Ministry of Finance and the Licensee in 2006. At that time, the debt owing was approximately $50,000. The MOU was not complied with. The first required filing was not made or paid on the due date. However, in reviewing Exhibit 1, the printouts suggest that payments were made on account, throughout 2006 such that the balance due was ultimately reduced to approximately $38,000.00 by the end of that year.
However, the last payment made on February 7, 2007 was non-negotiable. No further payments have been made and of note, none since the Notice of Proposal was issued on March 5, 2007.
While the Board appreciates Mr. Lin’s submission that the default in paying taxes is not being denied or condoned, the Board feels that this is a situation in which the fact of chronic non-compliance outweighs, perhaps regrettably, the personal situation. There may be a desire to sell the business and a willingness to discharge the tax debt from the proceeds, but it appears that no efforts have been made to sell despite the fact that a Notice of Proposal was issued on March 5th, to revoke the licence. There seems to be nothing more concrete than a hope to resolve the issue by way of a sale. No evidence was offered to the Board by way of mitigating factors for the non-compliance.
Further, while the Board recognizes the proposal to pay weekly amounts of $400 on account of the debt accruing, as a gesture of goodwill, the fact is that the Licensee has not demonstrated an ability to meet regular payment commitments, thereby negating the effectiveness and value of the proposal.
This is not a situation in which the business has suffered a short term setback which has resulted in a period of non-compliance; non-compliance has been an issue over a period of ten years.
The facts do strongly suggest financial irresponsibility in the conduct of the business and therefore the Board makes a finding pursuant to subsection 6(2)(a) of the LLA.
Further, the facts viewed historically lead to the conclusion that the Licensee has not conducted the business in accordance with the law and with integrity and honesty, in particular the continual failure to meet its obligations under the Retail Sales Tax Act and makes a finding pursuant to the allegations contained within subsection 6 (2)(d) of the LLA.
Finally, having made those findings, the Board further concludes, as a consequence thereto, that the Licensee is carrying on activities in contravention of the LLA subsection 6(2)(f).
Order
- The Board, therefore, hereby ORDERS that liquor licence number 20422 issued to Lai Jing Ltd., operating as House of Wong, 4601 Kingston Road, Scarborough, ON, M1E 2P3, be REVOKED, effective immediately.
DATED AT Toronto, this day of , 2007
PATRICIA MCQUAID, VICE-CHAIR ELEANOR MESLIN, MEMBER
PM/mw