Registrar, Alcohol and Gaming Commission Ontario v. 1642849 Ontario Ltd., 2008 CanLII 35186

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-

1642849 Ontario Ltd. O/A Atherley Arms Hotel Licensee

DECISION ON SANCTION

Panel: Guy Maurice, Board Member S. Grace Kerr, Board Member

Decision Date: April 24, 2008 Hearing Location: Orillia, 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 Toll Free In Ontario: 1-800-522-2876 Website: www.agco.on.ca

Appearances

Registrar, Alcohol and Gaming Commission ) Phillip Morris, Representative 1642849 Ontario Ltd., Licensee ) Noel Gerry, Representative

Authorities

St. Lawrence College of AA & Technology, [2000] O.A.G.C.D. No. 159

1. A hearing into a Notice of Proposal number 15181 dated May 7, 2007 to revoke liquor licence number 10559 (the "Licence") issued to 1642849 Ontario Ltd. (the "Licensee"), operating as the ATHERLEY ARMS HOTEL, (the 'Atherley Arms' or 'the establishment'), 2 Creighton Street, Ramara Township, Orillia, Ontario, L3V 1A8, on the basis of alleged violations of subsections 35(1), 41(1), 45(1) and 45(2) of Ontario Regulation 719/90 (the "O.Reg") made pursuant to the Liquor Licence Act ("LLA") and of subsection 30(4) of the LLA was held on October 1, 2, 4 and 5, 2007 in Orillia, Ontario.

2. In its decision dated March 5, 2008, the Board found the Licensee breached subsection 30(4) of the LLA and subsections 35(1), 45(1), and 45(2) of the O. Reg. The Board dismissed the alleged breach of subsection 45(2) of the O. Reg. on February 10, 2006 and the alleged breach of subsection 41(1) of the O. Reg on February 16, 2007. Parties were directed to provide written submissions on appropriate sanction. The Board has received and reviewed those submissions.

Submissions

3. The Registrar asks for the Licence to be revoked in that:

a. the Licensee breached subsection 45(1) of the O. Reg on 4 counts on September 16, 2006. The Licensee's response was inadequate to the problem of drunkenness that existed that night and there were insufficient security measures in place to deter drunkenness that night;

b. the Licensee breached subsection 35(1) of the O. Reg in that no light meals were available on November 22, 2006;

c. the Licensee breached subsection 30(4) of the LLA by permitting an 18 year old to consume liquor in the premises. Gerry Belliveau was the manager on duty and Mr. Bert O'Mara, the principal of the licence holder, was not present;

d. the Licensee breached subsection 45(2) of the O.Reg by permitting staff and patrons to buy and sell controlled substances in the licensed premises and parking lot on six (6) dates between April and October, 2006. The illegal transactions occurred openly at the establishment, and involved a wide variety of substances. During the relevant times, Mr. Trask and Mr. Belliveau managed the day-to-day operations; Mr. O'Mara was never present; and

e. Mr. O'Mara left his business totally in the control of Mr. Trask and Mr. Belliveau. Formerly, these men were managers for Riccardo DiGiuseppe, a person banned by the Boards of both the AGCO and the LLBO from holding liquor licences in the Province of Ontario; Mr. O'Mara was aware of this fact.

4. The Registrar submits that Mr. O'Mara cannot substantiate that he has any control over the establishment or that he, Mr. Trask, and Mr. Belliveau will be able to or interested in stopping illegal activities in the future. Cases were provided where the Board had revoked licences in similar circumstances to the case at hand.

5. The Licensee urges that a suspension of 21-30 days would meet the goals of specific and general deterrence. A revocation would be too harsh given there was some mitigation (offending staff had been dismissed), the unlawful activities have ceased since October, 2006, and this owner has no previous record. Also, the Registrar did not allege subsection 6(2)(d) of the LLA, which is necessary for the licence to be revoked. The Registrar's cases were distinguished and the Board was provided with other cases where a suspension had been ordered in circumstances involving the sale of narcotics in licensed premises.

6. The Licensee would be amenable to having conditions attached to its licence that would prevent Mr. Belliveau and Mr. Trask from working in the establishment and require it to conduct background checks on all of its employees.

7. In reply, the Registrar distinguished the Licensee's case law. No 'presumption of good conduct' can or should be inferred; the October, 2006 – October, 2007 time frame suggested by the Licensee in that regard is arbitrary. A first-time offender's licence can be revoked if the particular facts warrant that sanction, it being unnecessary for the Registrar first to make a subsection 6(2)(d) allegation.

Analysis and Reasons

8. In this case, revocation of the liquor licence is the appropriate sanction, from both a specific and a general deterrence point of view. The evidence confirms that the Licensee, either wilfully or due to wilful blindness and in a number of important ways, completely abdicated its responsibilities as a licence holder under the legislation. Based on the evidence before it, the Board made findings of several serious violations of the LLA and its Regulations by the Licensee (see paragraph 2, supra). Furthermore, the unlawful behaviours covered a broad base of serious, prohibited activities (and while the Board highlights the offences of 'permitting drunkenness' as well as 'permitting the sale/use of controlled substances' and 'allowing underage service', in doing so it does not minimize the Licensee's 'failure to have light meals available' for service to its patrons). Also, the offences were numerous, occurred over a significant period of time, and were pervasive in effect. Additionally, the violations risked the public's safety. Finally, a failure to appropriately sanction the Licensee's egregious' behaviour would cause the public to lose confidence in the integrity of the system responsible for overseeing licensed establishments and not send out the required message of accountability to other licence holders.

9. Licensees are held to the standard of the prudent licence holder (para. 46, St. Lawrence College of AA & Technology). The subject Licensee, 1642849 Ontario Ltd., fell far short of that standard. Credible, substantial, and non-contradicted evidence supports the conclusions that the Licensee made no inquiries into levels of sobriety before patrons were allowed entry into the establishment and that, once there, it did nothing to prevent and deter drunkenness. Further, once drunken patrons were pointed out to the manager on duty, their response was inadequate to the problem. In addition, insufficient security measures were in place to deter drunkenness on the premises: for example, the establishment had no (or inadequately trained) persons responsible for security; no other evidence detailing the existence of any other types of security measures (such as, for example, the existence of surveillance cameras, banishment of people from the establishment, and so on) was introduced. All the while, Mr. O'Mara chose not to be present in his establishment or, certainly, was rarely there.

10. The establishment also openly allowed the sale/use of narcotics by patrons on its premises. The problem of narcotics was extensive on many levels: its scope (involving patrons and staff), the number of transactions, the time period at issue (sales/purchases on six dates between April and October, 2006), and the wide variety of drugs involved (cocaine, crack cocaine, ecstasy, and/or methamphetamines). Thus, the managers in charge of the establishment, Mr. Trask and Mr. Belliveau, either knew or ought to have known that illegal drug use and transactions were taking place in the premises. As principal of the licence holder, Mr. O'Mara, in turn, is deemed to have the same knowledge as his managers, even though the evidence established that he infrequently attended the establishment and delegated its day-to-day operations and management to Mr. Trask and Mr. Belliveau. Mr. O'Mara cannot excuse himself from that knowledge simply because he was hardly ever there. Akin to the Board's concerns regarding the drunkenness allowed on the premises, the Licensee, and the managers he delegated responsible for it, were aware of the significant drug transaction problems taking place in the establishment, but took no real action to deter or prevent them.

11. Mr. O'Mara, as principal of the licence holder, remained primarily responsible for knowing what was taking place in his establishment and, equally important, for doing something about it. Yet, he did nothing of any significance to address the serious lapses in his duties as a licence holder that resulted in the drunkenness and drug charges laid against the establishment or to prevent their recurrence. These significant lapses in the Licensee's responsibilities are compounded by additional findings by the Board against the establishment: on at least one occasion (February 16, 2007), an underage patron was served an alcoholic beverage in the establishment; on another occasion (November 22, 2006), no light meals were available to patrons who were consuming alcoholic beverages there.

12. The Board is concerned not only with the state of the Licensee's operation that resulted in all of its findings, but also with the establishment's circumstances, both currently and for the future (para. 42, St. Lawrence College of AA & Technology). Here, the Licensee presented insufficient evidence to assure the Board that its past, very serious problems would be averted in the future. It had Mr. O'Mara's vaguely-worded, uncorroborated testimony that he has an unwritten policy against 'over service', 'service of youths', 'use/sale of narcotics'. That testimony was of limited value to contradict the serious allegations made against the establishment because, by his own admission, he was rarely there and had delegated responsibility for its management to Mr. Trask and Mr. Belliveau, who were not called to testify.

13. Further, and significantly, the managers, Mr. Trask and Mr. Belliveau, continued to be employed by Mr. O'Mara at the time of the hearing (October, 2007), if not to this date. These men were hired personally by Mr. O'Mara to be in charge of the establishment. Either one or the other was in charge of it on the dates the various prohibited behaviours occurred. Also, at the time of their hire, Mr. O'Mara knew them to be former employees of an establishment which had its licence revoked because of criminal activities which occurred there. A prudent licence holder would not have hired these gentlemen in the first instance; they certainly should not have continued in its employ once the Registrar's very compelling and extensive evidence going directly to the derogation of their responsibilities was disclosed to the Licensee in this process. Furthermore, while their integrity was very much in question in this case, the Board was not given the opportunity to hear from them. Accordingly, the Board drew the negative conclusion that their evidence would have contradicted that of Mr. O'Mara (see paragraph 119 of the Board's Decision in this matter, dated March 5, 2008).

14. The Board therefore believes that a suspension will not resolve the problems at the premises or encourage this Licensee to change the way it conducts its business. Not only has Mr. O'Mara abdicated his responsibilities under the legislation, he has shown no remorse and little concern for his inactions as regards the very serious matters that brought his establishment before the Board. While some steps were taken in alleged mitigation, that is, some of the staff involved in the sales/use of narcotics was dismissed by Mr. O'Mara, these were insufficient given the seriousness and extensiveness of the establishment's violations of the liquor licensing provisions.

15. The Board has also carefully considered the fact that this Licensee has no prior record, but concludes that it can revoke the licence of a first-time offender given the appropriate facts. In this case, although some of these violations occurred very early on when the Licensee took over the establishment, importantly, they also continued a significant period of time thereafter. Also, Mr. O'Mara, as principal of the Licensee, did not appear to know or care what was taking place in the establishment. The Board concludes he is unable or unwilling to make the effort to operate the premises in accordance with the law and is oblivious (whether wilfully or wilfully blind) to the harm (actual or potential) the illegal activities permitted there were causing the community.

16. Imposing a suspension, even if it was lengthy, and even if conditions were also attached to the licence, will not resolve the problems at the premises or encourage the Licensee to change the way it conducts its business. The Board has grave concerns over the past and on-going management of this establishment. A suspension would also be insufficient to the ends of specific and general deterrence.

17. For all of these reasons, given the findings made, and the seriousness of this matter, an immediate revocation of the Licensee's license is the appropriate sanction in this case.

Order

18. After carefully considering the submissions and case law, the Board ORDERS the immediate REVOCATION of liquor licence number 10559 issued to 1642849 Ontario Ltd. operating as the ATHERLEY ARMS HOTEL, 2 Creighton Street, Ramara Township, Orillia, Ontario, L3V 1A8.

DATED AT TORONTO THIS 24th DAY OF APRIL, 2008

S. GRACE KERR, BOARD MEMBER GUY MAURICE, BOARD MEMBER

SGK/sm