Registrar, Alcohol and Gaming Commission Ontario v. 6607543 Canada Inc., 2008 CanLII 35187

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-

6607543 Canada Inc. O/A or intending to O/A Backstage Night Club

Applicant

-and-

Les Suites Hotel

Objector

DECISION

Panel: David C. Gavsie, Chair Bruce Monteith, Board Member

Decision Date: May 12, 2008

Hearing Location: Ottawa, 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 ) Joyce Taylor, Representative

, Applicant 6607543 Canada Inc., Applicant ) David Capra, Representative

Les Suites Hotel, Party to the Proceedings ) Gordon Douglas, Representative

Authorities

Ontario (Registrar of Alcohol and Gaming) v. Hosseini-Rad, [2004] O.J. No. 1273

Elektrowerkz Café, [2001] O.A.G.C.D. No. 112

Major Mack Hotel v. Ontario (Liquor License Board), [1999] O.J. No. 1418

Cue's Whole 9 Yards, 2007 CanLII 6216 (ON A.G.C.)

The Application

1. A hearing of the Alcohol and Gaming Commission of Ontario (“AGCO”) was held in Ottawa on November 7 and 8, 2007, January 22 and 23, 2008, and March 19, 2008 with regard to an application (the “Application”) for a liquor licence made by 6607543 Canada Inc. (the “Applicant”) operating or intending to operate as BACKSTAGE NIGHT CLUB, 137 Besserer Street, Ottawa, Ontario, K1N 6A7 (the “Premises”), establishment number 802794. The Registrar of the AGCO had issued a Notice of Proposal to review the Application (the “NOP”) dated August, 2007, number 15457, on the basis of alleged violations of subsections 6(2)(d), (e), (f) and (h) of the Liquor Licence Act (“LLA” or “Act”).

Decision

2. After considering all the evidence and submissions the Board DENIES the Application. Reasons for these findings follow.

Preliminary Matters

3. Ms. Taylor indicated that the Registrar opposes the Application.

4. Les Suites Hotel requested party status for the hearing in opposition to the Application on the basis of subsection 6(2)(h) of the LLA.

5. The Applicant opposed the request on the basis that March 7, 2007 was the final date for objection letters to be received by the AGCO, and the letter from Les Suites Hotel was signed March 8, 2007.

6. Further, Mr. Capra, for the Applicant, argued that the summary of noise complaints referred to by Mr. Douglas, the representative for Les Suites Hotel in his submissions for party status, is new evidence and had not been properly provided to the Applicant

7. The Board ORDERED that Les Suites Hotel be made a party to the proceeding. The Board is not constrained by the date of a letter in deciding whether to make a person a party to the proceedings provided there’s no prejudice to the process or the parties. Les Suites Hotel is a resident of the municipality within the meaning of paragraph 6(2)(h) of the LLA in that the back of the hotel is on Besserer Street across from door to an entry/exit into/from the Premises.

8. The Board ORDERED Mr. Douglas disclose all materials on which his client intended to rely at the hearing.

9. Ms. Taylor placed the following in evidence:

a) letters (4) opposing the Application (Ex. 1);

b) letter from Equity Realty Group Inc. dated March 13, 2007 (Ex. 2); and

c) letters (2) in support of the Application (Ex. 3).

10. Copies of Ex.1, Ex.2, Ex.3 and the NOP were ORDERED to be disclosed to Les Suites Hotel.

11. At the start of the hearing on day 3 – January 22, 2008 - Ms. Taylor said that Mr. Smith told her he would be calling Mr. White as a witness. Ms. Taylor said that to date she has not received from Mr. Smith a list of witnesses or what they would be giving in evidence. This was in violation of the Board Order dated November 23, 2007 ordering the Licensee (it should have read “Applicant”) to provide a list of witnesses and a summary of their evidence at least 10 days before today’s hearing.

12. For reasons given at the hearing, the Board ORDERED Mr. Smith to furnish the list of witnesses and summary of their evidence to Ms. Taylor by 1:30 p.m. that day.

13. Panel Member Monteith has resigned from his duties and responsibilities as a Member of the AGCO Board effective March 29, 2008, and was therefore unable to participate in making this order. The remaining Panel Member, Chair Gavsie, has rendered the decision in this matter pursuant to subsection 4.4(1) of the Statutory Powers Procedures Act.

14. The establishment was being run as an after hours club without alcohol service primarily for young patrons. It was now applying for a liquor licence.

Registrar’s Evidence

15. Marie Juliette Tessier gave evidence. She was in the Premises on March 3, 2007, where she met up with her friend, Sara Burnett. Ms. Tessier had been at Heaven nightclub and went to Backstage when Heaven closed. Backstage is located across the street from Heaven at Dalhousie and Rideau Streets. She was in the Premises by 3:30 a.m.

16. Ms. Tessier said that Ms. Burnett had consumed a few drinks at Heaven. According to Ms. Tessier, Ms. Burnett was drunk but not overly intoxicated.

17. Ms. Tessier stated that she was searched as she came into Backstage – pockets, boots, socks, hat and purse. After entering, she went onto the dance floor to dance as she normally did.

18. She noticed that Ms. Burnett was not stable. She could not stand alone and was leaning on a friend.

19. Ms. Tessier said she went around and said hello to people, and then went downstairs to the bathroom. This happened perhaps 30 minutes after she entered the Premises. She was in the bathroom for about 10 minutes.

20. After she came up from the washroom, Ms. Tessier went to see Ms. Burnett. A male was holding her up. Her eyes were closed. Ms. Tessier did not think that Ms. Burnett was awake.

21. This was different than when Ms. Tessier left her. Ms. Burnett had been dancing and now she could not even stand up.

22. Ms. Tessier said she asked for help to bring Ms. Burnett to a couch to lay her down. Ms. Tessier thought she was drugged. Her eyes were not open, she could not talk. Ms. Tessier thought she was showing the effects of the drug gamma hydroxy butyrate (GHB) or “ecstasy”. A bouncer, Mo, checked Ms. Burnett’s pulse and her breathing, he tried to get her to sit up. The bouncer mentioned he would call an ambulance.

23. An ambulance arrived. Ms. Tessier told the paramedics that Ms. Burnett probably had drugs in her – GHB or something else, and that she also had alcohol in her system.

24. Ms. Burnett was taken by ambulance to Ottawa Civic Hospital. Ms. Tessier spoke to police at the hospital.

25. In the morning, Ms. Tessier spoke to Ms. Burnett who asked what had happened. She remembered being at Heaven and at Backstage. Ms. Burnett told Ms. Tessier she had taken pills.

26. At this point, Ms. Taylor moved to have Ms. Tessier be made a hostile witness because, according to Ms. Taylor, Ms. Tessier had told her earlier in the day she did not know if Ms. Burnett had taken drugs. Mr. Smith for the Applicant did not have a statement in writing from Ms. Tessier. The Board decided to give latitude to Ms Taylor, but did not declare Ms. Tessier to be a hostile witness.

27. Ms. Tessier stated she did not know where Ms. Burnett took drugs or what she did. Before the collapse, Ms. Burnett did not say anything to Ms. Tessier about drugs. In the morning, she told Ms. Tessier she took something.

28. Ms. Tessier said she went to Backstage every second weekend. She knows the manager, Justin, will allow her to use the nicer bathroom downstairs. She knows the staff.

29. In response to questions from Mr. Douglas, Ms. Tessier said she is 22. She is always searched on entry as is everybody. If people go out to smoke, they are searched when they come back in. The same search procedure is used at the entry doors, one on Rideau Street and one on Besserer Street.

30. In answer to questions on cross-examination, Ms. Tessier said the response by bouncers to Ms. Burnett was good. They were quick and respectful. Richard (Mr. White) and Justin, she said, came to check on Ms. Burnett.

31. Constable Paramjit Singh gave evidence. He has been an officer with the Ottawa Police Service (OPS) since September, 2002. He is familiar with the Premises. He was there on March 3, 2007. He had generated a report which, on consent, he was allowed to use to refresh his memory.

32. Const. Singh arrived at the Premises between 3 and 4 a.m. He received a medical call to assist emergency services and the fire department regarding an unconscious female. EMS and fire department were there when he arrived.

33. Once inside, Const. Singh was directed by the manager to the back of the Premises at the Besserer Street end. He crossed the dance floor and stepped up to the back seating area.

34. Const. Singh said he saw EMS working on an unconscious female. EMS told Const. Singh the female smelled of alcohol and had alcohol in her system. A female was beside her, Julie Tessier.

35. Const. Singh said he asked Ms. Tessier what happened. She said her friend may have GHB in her system. She also said she had met Ms. Burnett at Heaven earlier in the evening around 1:30 a.m.

36. Const. Singh said GHB is known as a date rape drug. Normally girls do not ask for it. It affects people differently.

37. Const. Singh said Ms. Tessier told him she had 4 drinks. She and Ms. Burnett had met up with a male. They knew him through the bar scene. They had started dancing and mingling.

38. Ms. Tessier had gone to the bathroom downstairs and came up and danced. She lost sight of Ms. Burnett for 10 or 15 minutes. The male told Ms. Tessier that Ms. Burnett was “up”. Ms. Tessier noticed Ms. Burnett was not behaving normally even though she had taken alcohol.

39. Ms. Tessier said that Ms. Burnett was having a hard time standing and her knees were shaking. Ms. Burnett had gone to the back and had been sprayed with water.

40. Ms. Tessier told Const. Singh that she confronted the male and asked him what he had given to Ms. Burnett. The male replied “G”, another acronym for GHB or ecstasy. The male left the scene and staff called 911.

41. Const. Singh said that EMS took Ms. Burnett to the Ottawa Civic Hospital, and that he drove Ms. Tessier there. Doctors told them Ms. Burnett would be fine. Const. Singh said he left his business card but had no calls. He did not speak to Ms. Burnett at all at the hospital because she was unconscious.

42. Const. Singh said he received a description of the black male from Ms. Tessier. He was 5 feet 6 or 7, muscular, had no facial hair, bald, was not wearing a T-shirt in the bar, was wearing blue jeans, and might have been a male stripper.

43. In answer to questions on cross examination, Const. Singh said Ms. Tessier was not 100% sober, but was not tipsy. She was confident in what she was saying. She was coherent.

44. In answer to a question on re-direct by Ms. Taylor, Const. Singh said no criminal charges were laid as a result of this incident.

45. Constable Stephane Bujold was called to give evidence. Const. Bujold has been a member of the OPS for 6 years. He is familiar with Backstage and was there on February 18, 2007. He made notes and a report which, on consent, he was allowed to use to refresh his memory.

46. He arrived at 12:59 a.m. to conduct a regular walk-through looking at LLA compliance. He was with other OPS officers – Sgt. Ghadban, Const. Ritchie, and Const. Savory,

47. Const. Bujold said he noticed one individual in the entranceway staring blindly, rocking back and forth, eyes unblinking. He was not drunk but showed signs of being under the influence of narcotics.

48. The male didn’t have any idea police officers were walking toward him. The officers were all in uniform. They asked the male patron for identification.

49. The bar was dimly lit. The officers shone a halogen flashlight into the male’s face. His pupils were dilated. The pupils had no reaction when the light was shone. This, said Const. Bujold, is evidence of narcotics. Alcohol in one’s system would cause pupils to react.

50. At this point a second male walked toward Const. Bujold. That male was being guided by a female who had her hands on the male’s shoulder. The second male was similar in displaying characteristics to the first.

51. Const. Bujold asked the second male for identification Const. Bujold used the flashlight to see the second male’s eyes. There was no reaction of the male’s pupils to the flashlight.

52. The second male admitted to Const. Bujold that he had taken psilocybin, a controlled substance also know as “shrooms”, or “magic mushrooms”.

53. The male’s female companion was in the same state as the male, but not as advanced. The female denied using any drugs.

54. Const. Bujold described the hallway. It is about 20 feet wide. There is a coat check on the right side. There is a doorman at the door, a male. His name is Ernie Carroll and he usually stands outside the Rideau Street door.

55. The night in question, Const. Bujold did not observe Mr. Carroll doing anything. Traffic was fluid going in and out. People came in, checked their coats and went into the bar. Const. Bujold did not see anyone being searched.

56. After identifying the 2 males in the hallway, Const. Bujold moved down the hallway. He saw a third male with whom he talked. The male was very, very relaxed. The male admitted to using ecstasy and having smoked a joint, both of which are controlled substances.

57. As he moved further into the Premises, Const. Bujold noticed several people with ecstasy soothers in their mouths. The soothers are used to stop the grinding of teeth, an effect of ecstasy. Const. Bujold said 5 to 8 people were on the dance floor.

58. Const Bujold stated the Sgt. Ghadban located Mr. White, and told him about police observations. Mr. White took no action while police were there. Mr. White said that to combat any drug use, he was having people searched. However, Const. Bujold did not see any such activity.

59. Mr. White told the officers that he was restricting patrons to those under 19. Const. Bujold told him this was not correct as the male he spoke to in the hallway was 26. Mr. White then said he was confusing nights. There was a prior event where age was restricted.

60. Const. Bujold said be believed Tony Zein had a hand in the business. He has been in the Premises. Mr. Zein’s name had been linked to Backstage by street kids who use ecstasy.

61. Const. Bujold stated that Mr. Zein has a criminal record. From street kids, Const. Bujold learned that Mr. Zein could be involved with younger girls. Const. Bujold understood Mr. Zein and Mr. White were partners in the Backstage business.

62. At the end of his inspection, Const. Bujold went out the Besserer Street door to talk to Mr. White. He told Mr. White he would be reporting observations to the AGCO. Const. Bujold was aware that Mr. White had made an application for a liquor licence.

63. Const. Bujold said he was also at Backstage on March 3, 2007. He stood outside and talked with Mr. Carroll. Const. Singh was on scene and since the time was near the end of Const. Bujold’s shift, he told Const. Singh to take the lead. Const. Bujold said the paramedics were there. Mr. White escorted Const. Singh into the bar area.

64. In answer to questions from Mr. Douglas, Const. Bujold said he had been in the Premises perhaps 3 times over 2 years, always to conduct regular walk through inspections. He always used the Rideau Street entrance and Mr. Carroll was there.

65. Const. Bujold described the hallway inside the Rideau Street door as being open. Halfway down on the right side was a standard coat check area. Straight ahead are the washrooms. One goes to the right to proceed up the staircase to the main club area. The hallway is wide open.

66. Const. Bujold said he has not observed any searches being performed at the entrance.

67. In answer to questions on cross-examination, Const. Bujold said he was at the Rideau Street entrance to Backstage briefly on March 3. He had a casual conversation with Mr. Carroll between 3 and 3:30 a.m. Traffic that morning was not as fluid as it was on February 18.

68. Const. Bujold said on February 18, he entered the Premises through the Rideau Street door, and exited through the Besserer Street door. He spoke to Mr. White at the Besserer Street door.

69. Const. Bujold said he was at the Rideau Street entrance for about 10 minutes. He saw the first male and the couple there. The hallway is 20 to 30 feet in length and about 8 feet wide.

70. Const. Bujold stated that people were walking in and out. He indicated that probably 5 to 10 people exited and 5 to 10 people entered while police were standing in the hallway. He did not focus on the coat check activity.

71. Const. Bujold said that from the street, informants and AGCO Inspector Goddard, he knows Mr. White is involved and that Mr. Zein is a part owner. Street kids had told Const. Bujold that Mr. Zein had been in the club.

72. Const. Bujold stated that he did not see Mr. Zein in Backstage on the 3 occasions he was there. Const. Bujold has never dealt with Mr. Zein. He said he drew the inference that Mr. White is fronting for Mr. Zein before February 18.

73. On February 18, Const. Bujold said the inspection was initiated by police. He saw several people with soothers in their mouths. On March 3, he said he did not see anyone with soothers in their mouths.

74. In answer to a question from Mr. Douglas on re-direct, Const. Bujold stated that Mr. Zein had been convicted of living off the avails of prostitution, or pimping. He had no other knowledge. He did not know when this happened.

75. Constable Jason Savory was called to give evidence. He has been an officer with OPS for 6 years. He was at Backstage on February 18, 2007. He was with officers Bujold, Ritchie, Arsenault and Sgt. Ghadban. They were conducting routine checks of the bars in the Byward Market.

76. Const. Savory said Sgt. Ghadban and Const. Bujold conversed with a couple of people who appeared to be under the influence of drugs. These people were staring, their pupils were dilated, and they were spaced out. Const. Savory said he did not deal with any patrons.

77. Const. Savory said Ernie Carroll was at the Rideau Street door checking identification. He did not see anyone being searched.

78. Const. Savory said that Const. Bujold was using a flashlight, shining it into people’s faces to get their pupils to dilate.

79. Const. Savory said he had been at Backstage before that night. On that earlier occasion he indicated that 2 males were in the Premises who belonged to Redline Motorcycle Club, part of Hell’s Angels. One of the males was wearing gang colours.

80. The 2 males had been greeted at the Besserer Street door by Ernie. He shook hands with them like he knew them. Const. Savory had to get Mr. White to remove these 2 males from the Premises.

81. Though Const. Savory, an e-mail dated November 7, 2007, to Paul Johnston from Shawna McGrath was placed into evidence (Ex.4). Const Savory explained that Paul Johnston is a staff sergeant with OPS in charge of the neighbourhood unit. Shawna McGrath is a crime analyst with OPS. She works on statistics.

82. Const. Savory said he spoke to Ms. McGrath today (November 8, 2007) about Ex. 4. It is a summary of calls for service made to OPS since January 1, 2006, for the addresses being the 2 entrances to the Premises.

83. In answer to questions on cross-examination, Const. Savory said he has worked in Byward Market for 3 years. He is familiar with Besserer Street but he cannot name every business.

84. Const. Savory said he knows 137 Besserer Street is the address for Backstage. There is a tanning salon and a hotel across the street. Const. Savory stated that Rumba Nightclub is upstairs from Backstage. Their entrance is on Rideau Street.

85. Referring to Ex.4, Const. Savory said for 174 Rideau Street, there were 6 calls for service from January to November. Const. Savory did not know when these occurred. Regarding the calls for 137 Besserer Street, Const. Savory did not know when they had occurred.

86. Constable James Ritchie was called to give evidence. He had been an officer with OPS since February, 2000. He is familiar with Backstage. He was there on February 18, 2007. He had made notes which, on consent, he was permitted to use to refresh his memory.

87. Const. Ritchie said he went to Backstage to inspect the premises with other officers. He remained just inside the front door with Const. Arsenault. Other officers walked through.

88. At 1:57 a.m. when he was leaving through the Rideau Street door, as he opened the door, it bumped into someone. There were 4 or 5 people in the alcove outside. One was smoking a marijuana cigarette. Const. Ritchie placed that person under arrest.

89. A subsequent search located 2 more small bags of marijuana, but no one was charged.

90. Detective Constable Luc Bouvier of the Ontario Provincial Police (“OPP”) was called to give evidence. He conducted a liquor licence investigation regarding Backstage in February, 2007. He made notes which, on consent, he was allowed to use to refresh his memory.

91. Det. Const. Bouvier had been asked to conduct the investigation by David Baxter, AGCO Manager of Licensing. This was a new applicant and there were questions about finances and a possible criminal element being involved.

92. Det. Const. Bouvier said he attempted to get hold of Mr. White to interview him and to serve him with a demand for documents.

93. On February 27, 2007, Det. Const. Bouvier called Backstage to speak to Richard White. He actually spoke to Tony Zein who gave him Mr. White’s cellular phone number. When asked what he was doing there, Mr. Zein said he was the assistant manager. The manager was Jason.

94. Det. Const. Bouvier contacted Mr. White and they met on February 28, 2007.

95. Det. Const. Bouvier asked questions and Mr. White answered. He determined that the landlord for 137 Besserer Street was Maniplex Investments. Mr. White was renting the main floor and the basement for $6,000 per month since September 2006. On March 12, 2007, the rent was going to double to $12,000 per month. Mr. White was subleasing the property from Nemr (aka Tony) Zein.

96. Det. Const. Bouvier was told by Mr. White that the Backstage was owned by 6607543 Canada Inc.

97. Mr. White told Det Const. Bouvier that he had $10.50 in his own bank account, and that he had been unemployed for one year. Mr. White was involved in the creation of a prepaid MasterCard programme, and he had been living on personal savings and on money earned through the prepaid MasterCard programme.

98. Mr. White also told Det. Const. Bouvier that he had several employees at Backstage. Justin Wong was the bar and operations manager. Joe Juarez was the entertainment coordinator. Kevin (Mr. White did not know his last name) was a casual bartender. Mo Suthil was security, as a casual, and as well a Mr. Ricard was also on security.

99. At the time of the interview, Mr. White told Det. Const. Bouvier he was 1 month behind in his rent. Prior to that rent had been paid by Mr. White out of his personal savings.

100. Mr. White explained to Det. Const. Bouvier that Backstage operated periodically on Friday night with events from 7 to 11 p.m. Sometimes it becomes an after hours club operating from 1:30 to 8 a.m. Sometimes teen events are held from 10 p.m. to 8 a.m.

101. In the interview, Det. Const. Bouvier told Mr. White that when he called him for an interview, he had spoken to Tony Zein who had identified himself as the assistant manager. Mr. White explained that it was part of his rental agreement for him to hire Mr. Zein but that Mr. Zein would not have any managerial powers, just the title.

102. At the end of the interview, Det. Const. Bouvier served Mr. White with a demand to produce documents and information, a copy of which was placed into evidence (Ex.5).

103. Det. Const. Bouvier told Mr. White he needed answers and documents within 30 days after which his superior would expect a report to be submitted from him regardless of the status of the investigation. They reviewed the request (Ex.5) together.

104. Det. Const. Bouvier said that Mr. Zein’s name rang a bell in an unrelated manner. AGCO liquor inspector Godard had come to him in the past about Mr. Zein being seen in another bar. Insp. Godard was curious why Mr. Zein was at Backstage.

105. Det. Const. Bouvier queried Mr. Zein’s name and approximate age on Canadian Police Information Centre (“CPIC”). He received a “hit” for a name close to that being searched. This person had a criminal record.

106. A summary of the CPIC information in the form of an e-mail was placed into evidence (Ex.6). It originated from Edward Chong, an OPP detective sergeant attached to the AGCO, Toronto unit. Det. Const. Bouvier said he believes this information to be true.

107. The e-mail (Ex.6) was addressed to Ken Plantt, an OPP staff sergeant attached to the AGCO in Toronto, and to Mr. Phillip Morris an AGCO legal counsel.

108. Det. Const. Bouvier said that the August 12, 1994 conviction, second entry – living on avails of prostitution – was one he had never seen before. Mr. Zein is the only person he knows who had been convicted of that charge.

109. Det. Const. Bouvier said that when he asked Mr. Zein’s role at Backstage, Mr. White answered right away. The answer that this was a condition of the lease is the only time he had seen it. To secure the lease, Mr. White said he had to give Mr. Zein a title at Backstage.

110. Det Const. Bouvier stated he was concerned that Mr. Zein was a manager, and if not, the title might make him act like one. No personal history report for Mr. Zein had been submitted to the AGCO.

111. Det. Const. Bouvier said that Mr. White provided no information within the 30 days after the interview. They spoke on the telephone. Mr. White asked for an additional 5 days which Det. Const. Bouvier granted but told Mr. White after that he must submit a report.

112. Nothing was received so on May 2, Det. Const. Bouvier wrote his initial report. The report indicated what he had found on an Equifax credit search report on February 28, 2007 an entry which showed that in 2003, the Canadian Imperial Bank of Commerce (“CIBC”) had written off a $10,000 loan, and again in 2005, CIBC had written off $308.00. Mr. White had a student loan default for $12,000. In 2006, CIBC card service wrote off an amount of $104.

113. Det. Const. Bouvier wrote his report based on his interview with Mr. White on February 28.

114. Det. Const. Bouvier stated that he had seen the OPS reports from the Besserer Street address. Backstage was a place where kids attended to use ecstasy. One of the OPS reports said that a patron admitted having consumed ecstasy, and on another occasion, OPS attended to assist paramedics where a young female had ingested drugs and was found unconscious.

115. On May 11, Det. Const. Bouvier received a package from Mr. White.

116. Through Det. Const. Bouvier, a copy of the Application was placed in evidence (Ex.7). The Application was signed by Mr. White and dated December 4, 2006.

117. Det. Const. Bouvier said that in answer to question “C” on page 20 of 21, Mr. White answered that he would manage the day-to-day operation of the business. Only Mr. White submitted a personal history report, no one else. The Applicant was shown on page 17 of 21 of Ex.7 to be 6607543 Canada Inc. Mr. White was indicated to be an officer, President, and to hold 100% of the equity shares of that corporation. No one else was indicated on Ex.7 to be an officer, director or shareholder, of the corporation.

118. Det. Const. Bouvier said that the package received from Mr. White on May 11, 2007 contained some of the documents requested in Ex.5. These were:

(i) a copy of Mr. White’s passport;

(ii) Mr. White’s c.v. Also there was a one sheet cover page. It stated what was in the package and gave some information including that Mr. White worked for Nav Canada for 5 years, gave no position or description of duties, and said downsizing was the reason for his leaving.

(iii) a tax notice of assessment for 2001 and 2002 for Mr. White. Tax returns of Mr. White for 2003, 2004 and 2005 were included. No tax information for the corporate Applicant was in the package; and

(iv) some bank account information. There was information showing Mr. White had GIC’s in his RRSP of $65,583.86. There were also statements of Mr. White’s personal bank account at the Bank of Montreal but not for the 12 months requested. 9 of the requested 12 monthly statements were included. There were also statements from Mr. White’s account at a Caisse Populaire, missing 5 of the 12 months requested. Nothing was in the package regarding bank accounts of the corporate Applicant.

119. Det. Const. Bouvier said that when he met with Mr. White at the end of February 2007, he asked for some general financial information. Mr. White told him he did not own property. Rather, he rented an apartment.

120. In answer to question 5 on Ex.5, Mr. White provided mortgage information, but no address. He indicated he obtained a mortgage from ING in January 1997. The original amount was $108,000, with monthly payments of $653.00. The current balance owing was $81,641. Mr. White estimated the current value of the property securing the mortgage to be $160,000.

121. Det. Const. Bouvier then reviewed the rest of the requested information contained on Ex.5. Regarding:

(i) question 6 – nothing was provided;

(ii) question 7 – There was a statement from Canada Trust re. Mr. White’s RRSP, and nothing else;

(iii) question 8 – Mr. White indicated that credit cards had been cancelled. Det. Const. Bouvier said on the Equifax credit report he obtained on February 28, 2007, it showed that Mr. White had a balance owing on it at December 31, 2006 of $6,776.00 and was making monthly payments;

(iv) question 9 – Mr. White indicated he never had claimed bankruptcy;

(v) question 10 – Mr. White indicated no legal action had been taken against him or the business;

(vi) question 11 – Mr. White stated no legal counsel was appointed;

(vii) question 12 – the landlord was shown as being Maniplex Investments, 400 Dalhousie Street, Suite 200, Ottawa. A copy of a sublease was enclosed, and a copy of it was placed into evidence (Ex.8). The parties to it were Tony Nemr Zein as sub-landlord and Backstage Nightclub as subtenant. No rent was indicated on Ex. 8;

(viii) question 13 – Mr. White stated that no other business partners exist and that no other entity has a financial interest.

(ix) Question 14 – Mr. White indicated no purchase agreement for the establishment exists; and

(x) Question 15 – the bar manager was shown as Justin Wong with an address in Nepean and his date of birth. No personal history form was ever received by the AGCO for Mr. Wong.

122. Det. Const. Bouvier said that no further information was received. He did call again on 2 occasions trying to reach Mr. White. Tony Zein answered the telephone both times.

123. In answer to questions on cross-examination, Det. Const. Bouvier said that as part of his job, he receives a request from the AGCO to do certain things, and based on that he provides a list of information he needs to an applicant.

124. Det. Const. Bouvier said his meeting with Mr. White on February 28, 2007 lasted about 40 minutes. Mr. White was polite and cooperative.

125. Det. Const. Bouvier said that he has no information that Mr. White has a criminal record. He has no information on a connection between Mr. White and Mr. Zein.

126. Det. Const. Bouvier said he never received a copy of the master lease, and had never requested a copy either.

127. Alexey Yugin was called to give evidence. Mr. Yugin owns the Avant Garde Bar and Gift Store which has a liquor licence. It is located at 135 ½ Besserer Street. Capacity for his premises under his licence is 40 people.

128. Mr. Yugin’s business is an art bar. He hosts musical events, usually jazz. There are art posters on the wall. His clientele are of mixed ages, but generally people who appreciate art.

129. Mr. Yugin said that Backstage creates loud music, so loud that sometimes glasses break in his premises. Underage teens wearing weird outfits are patrons of Backstage.

130. There is garbage strewn around on Besserer Street, broken glasses and bottles, alcohol bottles/ there is urine and other messes, and patrons of Backstage smoke marijuana.

131. All of this is painful for Mr. Yugin’s business. His customers are afraid of the Backstage crowd on Besserer Street. That crowd blocks the door to his establishment.

132. Mr. Yugin said he has asked police do something about these problems. Backstage had bouncers at their entrance on Besserer Street, but they only took care of the immediate area around their door. These bouncers could not control the crowd outside Mr. Yugin’s business. Tiles were missing from the face of the building. Mr. Yugin asked Backstage to fix this, but they have not even though the missing tiles were found inside Backstage.

133. Mr. Yugin said he was under the impression that Tony Zein was in charge at Backstage since its inception. Mr. Zein had introduced himself as the owner. Subsequently Richard White introduced himself as the owner. Both Mr. Zein and Mr. White promised to eliminate the problems.

134. Mr. Yugin recounted that Mr. White warned him of a coming party which would be noisy, but they would try to keep the noise down. Mr. Yugin tried to contact Mr. White re the noise which resulted from a rave with underage kids. D.J.’s from Backstage come into Mr. Yugin’s bar. Mr. Yugin asked them to tone down the music, but they said they could not.

135. Mr. Yugin told the D.J.’s he would go to Richard (White), but they told him Richard was nothing, he decides nothing, and that Tony (Zein) was the boss. When Mr. Yugin complained to the landlord, Mr. White showed up and introduced himself as the owner of Backstage. Mr. White promised to make things better. For a while, the music was turned down.

136. Mr. Yugin had complained to the AGCO. His letter dated February 2, 2007 is contained in Ex.1.

137. After he made his complaint, Mr. Yugin said Mr. Zein was very unhappy. Both Mr. Zein and Mr. White tried to get him to withdraw his letter. Mr. Yugin asked them to show their commitment to improve things. They did little.

138. There were similar crowds on the street. The crowds blocked the door to his business. There was drinking on the street and Mr. Yugin could smell marijuana smoke.

139. In his view, Mr. Yugin said Backstage could not handle a licence because they cannot control patrons.

140. In the spring of 2007, Mr. Yugin said he signed a memorandum of agreement on behavioral policy. The signatories were Avant Garde and Backstage. The landlord also signed it. The landlord is the same for both businesses.

141. Mr. Yugin reiterated his opinion that Mr. Zein was in charge of Backstage. When he complains that means he is losing money. Mr. Zein was always around when Mr. Yugin went inside Backstage, which was not often. Mr. White was there also.

142. In answer to further questions on cross-examination, Mr. Yugin said that Backstage has 2 entrances/exits, one on Rideau Street and one on Besserer Street. They use both if there is a large crowd, otherwise they use the Rideau Street entrance only.

143. If Backstage is using the Besserer Street doors, people line up on the sidewalk across Mr. Yugin’s entrance and Backstage puts up their stanchions and ropes across his windows.

144. In answer to questions on cross-examination, Mr. Yugin’s business, an art bar, has been the same since 2004. He usually opens at 2 p.m. and closes at 2 a.m. or earlier if there are no customers. He serves alcohol. There is no dance floor and a band plays usually from 8 to 9 p.m.

145. Mr. Yugin’s clientele ranges in age. He runs the bar. He employs a bartender.

146. Mr. Yugin said he has been in Backstage, but never as a customer. He goes there to tell them that their music is too loud. The back door of his premises is connected to Backstage.

147. There is another bar called “Rumba” located on the second floor with entrances from both Rideau Street and Besserer Street. Backstage and Rumba share an entranceway. One alcove off of the Besserer Street sidewalk is shared by Avant Garde and Rumba. There is a separate alcove for Backstage. It is 4 to 5 metres between alcoves.

148. Mr. Yugin said Backstage was open for more than a year but closed in the spring of 2007. He thought his bar lost money while Backstage was opened. Certainly his sales dropped. Business increased for him after Backstage was closed.

149. Mr. Yugin referred to the letter dated February 2, 2007 which he sent to the AGCO (part of Ex.1). It was the first letter of complaint he sent. Mr. Yugin explained he sent it because he had talked to Tony (Zein) who refused to do anything about the situation.

150. Mr. Yugin had also called the City of Ottawa by-law office to complain. After that, Mr. Zein came in to his establishment angry about Mr. Yugin’s calls.

151. Mr. Yugin said it was his impression that Tony Zein was the owner of Backstage. Mr. Yugin talked to him about his noise complaint.

152. Mr. Yugin did not know the relationship between Messrs. Zein and White. Mr. White said he was the owner. Mr. Yugin said he was aware of a contract between Messrs, Zein and White.

153. Mr. Yugin knew that Mr. Zein leased the premises from Mr. Angelo Seccaspina, and sub-let the premises to Mr. White. Mr. White had told him this when Mr. White introduced himself as the owner.

154. Mr. Zein told Mr. Yugin he was losing money.

155. Things became a little bit better after Mr. White took over, but basically it was the same mess as before.

156. During the spring of 2007, Mr. Yugin drafted a memorandum of understanding (MOU), after Messrs, Zein and White tried to persuade him to drop his complaint. They were writing proposals which were not satisfactory to him, so Mr. Yugin prepared the MOU. A copy was placed in evidence as Exhibit 9.

157. The MOU was signed by Mr. White. Mr. Yugin stated that he has another copy of the MOU which Mr. Zein signed.

158. A letter dated March 16, 2007 addressed to Mr. White and Mr. Seccaspina for Maniplex Investments was placed in evidence as Exhibit 10. It was signed by Messrs. White and Zein but not by Mr. Yugin.

159. An addendum to lease agreement dated June 12, 2006 was placed into evidence as Exhibit 11. It sets out steps to remedy the current situation and states at the bottom: “Should the following conditions not be ordered to, the landlord may void the lease agreement in its entirety.” The document is signed by Tony Zein and someone, supposedly Mr. Seccaspina, for Maniplex Investments.

160. As to timing, Mr. Yugin said the March 16 letter (Ex.10) came first, followed by the addendum to the lease agreement (Ex.11), and the MOU (Ex.9) came third.

161. Mr. Yugin said he did not draft either the March 16 letter (Ex.10) or the addendum to the lease agreement (Ex.11).

162. In answer to questions from Ms. Taylor on redirect, Mr. Yugin said that the March 16 letter (Ex.10) was an attempt by Messrs, Zein and White to persuade Mr. Yugin to withdraw his complaint. Mr. Yugin wanted to ensure that everything would be fine. He did not like complaining. While he did talk to them about the problems, nothing was resolved. Nothing improved after Messrs, Zein and White signed the March 16 letter (Ex.10).

163. Mr. Yugin said that Backstage was open Friday and Saturday nights, and sometimes on Thursday. Their music was particularly loud on Thursday.

Evidence of Les Suites Hotel

164. Steve Georgopoulos, the general manager of Les Suites Hotel, was called to give evidence. He has been the general manager since 1994. Les Suites Hotel is situated at 130 Besserer Street, connected to the Novotel Hotel.

165. Les Suites Hotel has 242 units, 236 of which are suites. 107 suites face Besserer Street. Their clientele is made up of corporate and government employees. A lot of guests are on long term stays of over 30 days. The Hotel is independent and not part of any chain. Therefore, its own brand is important locally and to visitors.

166. Mr. Georgopoulos said that he is familiar with Backstage. The Hotel is almost exactly across Besserer Street from the entrance to Backstage. Prior to Backstage, the Premises were known by other club names, some serving alcohol, some not. Clients are there after 10 pm. into the early morning hours. Mr. Georgopoulos feels Backstage will be no different than its predecessors in the same location.

167. Through Mr. Georgopoulos, a letter to him from the Atomic Club dated September 22, 1998 was placed in evidence as Exhibit 12. Mr. Georgopoulos said that he had brought a noise complaint to the attention of the Atomic Club because he could not understand why it was so noisy during the night. He saw long line ups to get into that club for himself.

168. Mr. Georgopoulos stated that there are 107 suites on 22 floors of his hotel facing Besserer Street. All have balconies with doors that open to them.

169. After receipt of the 1998 letter from the Atomic Club the problems were not resolved. Guests of Les Suites Hotel complained to Mr. Georgopoulos. He kept a log book of complaints, and reviewed filled out guest cards. He estimated he received 350 complaints a year, most of which related to night-time noise from the bars.

170. Through Mr. Georgopoulos a 2 page summary of noise complaints and a number of original complaints were introduced into evidence as Exhibit 13. The summary dates back to 1998. Mr. Georgopoulos explained that his hotel has 2 staff members who work overnight. They did not always record complaints, but there is no question that a lot of complaints relate to noise from the bars. The premises at 137 Besserer Street are complained about more than others.

171. Mr. Georgopoulos said he knows Mr. White who introduced himself as the new owner/operator of the bar. They met at Backstage, walked through the 2 levels, and sat in the bar area. That occurred on March 5, 2007.

172. Mr. Georgopoulos told that Mr. White about past issues that the tolerance for noise from his hotel guests is zero, and that if Mr. White can satisfy this issue, everything would be fine.

173. After Mr. Georgopoulos filed his objection to the Application (part of Ex.1), Mr. White wanted to meet with him. They did, and talked about the entrance to the Premises being on Rideau Street. Mr. Georgopoulos suggested to Mr. White that the doors on Besserer Street should be kept closed.

174. Mr. Georgopoulos explained that the noise on Besserer Street has led to a loss of revenue for his hotel because guests often do not return after their first stay.

175. In answer to questions from Ms. Taylor, Mr. Georgopoulos said that now that Backstage is not open, he receives fewer complaints. Also, the noise problems from Rumba and Avant Garde are minimal.

176. In answer to a question on cross-examination, Mr. Georgopoulos said there was no mention of Backstage on the 2 page summary, being part of Ex.13.

177. In answer to questions on redirect by Mr. Douglas, Mr. Georgopoulos stated the noise occurs mostly between 1 a.m. and 5 a.m. on Saturday and Sunday mornings.

178. Peter Switzer was called as a witness. He is corporate sales manager for Les Suites Hotel. He has held several different positions at Les Suites Hotel including being duty manager, and working on the front desk.

179. Mr. Switzer said he has received complaints regarding 137 Besserer Street, usually in the evening. His shift was usually in the evening. His shift was usually from 3 to 11 p.m. There were no specific complaints about Backstage. The complaints were about patrons of the establishment before it became Backstage.

180. Mr. Switzer mentioned issues with those patrons – noise, loud conversations while in line-ups, vehicles pulling up with horns honking.

181. Mr. Switzer stated that if 137 Besserer Street was not used as an entrance for Backstage, this would directly reduce the noise.

Applicant’s Evidence

182. Mr. Richard White gave evidence. He is employed at the Canadian School for the Public Service as an acting manager of financial planning and administration. He has 9 people reporting to him. He previously worked for Environment Canada.

183. Mr. White said he does not have a criminal record, nor has he had any criminal charges made against him.

184. Mr. White said that he signed a lease with Mr. Zein in September 2006 (Ex.8) to operate his own business, Backstage Nightclub, in the Premises. He was approached by Mr. Zein who himself had a lease from Maniplex Investments. Mr. Zein was having difficulty operating a business there and offered Mr. White the space to operate a club.

185. Mr. White chose to sublease from Mr. Zein rather than enter into a new lease with the landlord. Mr. White created the Applicant company, prepared tax registration forms, and had discussions with promoters, entertainers, and advertising organizations.

186. Mr. White had the time and desired to operate a nightclub. He has a passion for music. He lived in Ottawa and complained about the lack of night-life. He wanted to make money.

187. Regarding Mr. Zein, Mr. White stated that he is not a front for Mr. Zein. That is “100% incorrect”. Mr. Zein’s name does not appear in the licence application (Ex.7).

188. Mr. White said he was trying to be as open and complete as he could. He has said that Mr. Zein is his landlord, but otherwise has no operational capacity. His only authority comes as a maintenance person for the Premises. If the Premises were inspected, Mr. Zein was there and walked the inspector through to make sure any requirements were met.

189. Mr. White said he was not aware that Mr. Zein was involved in criminal activity. He only became aware of that in August 2007 when he received a package from the AGCO stating why they opposed the Application.

190. Mr. White stated that Backstage is no longer operating and that his lease with Mr. Zein expired. He has no relationship with Mr. Zein. He will be leasing the Premises from Maniplex Investments. There will be no necessity for Mr. Zein to be involved.

191. The model Mr. White was following for his business on opening was than of an after-hours club operating from 11 p.m. to 8 a.m. without a liquor licence. The focus was on music.

192. Shortly after opening, Mr. White saw that model was not working, and therefore he applied for a liquor licence in December 2006.

193. Mr. White said that because he operated an after-hours club, police visited regularly. They came in, walked through, and left. He has video surveillance equipment inside the club with staff.

194. The bike club members referred to in earlier evidence, came in though the Besserer Street door and went downstairs. OPS came in and he was called on the walkie talkie about this and to meet the OPS members. Mr. White asked about his policy permitting motorcycle gang members with patches in the club. His policy was not to allow them in. OPS then escorted the 2 individuals out of the club. No alcohol was being served.

195. Mr. White said the night EMS had to be called, he was in the Premises. He said that he has a policy that no one who is obviously intoxicated can be in the club. Similarly if a patron is belligerent, acting disorderly or falling over, he or she cannot come into the club.

196. Mr. White said that the young lady in question came in and went through searches. If she had gone outside and beyond sight of the doorman, she would have been searched on the way back in. Patrons cannot leave with beverages, nor can they bring any beverages in.

197. Mr. White said that he had security people on duty trained in CPR. A security person attended to the young lady until EMS arrived. Later that morning Mr. White went to the hospital to make sure the young lady was all right. She was fine and Mr. White drove her home from the hospital.

198. Mr. White described his meeting with Det. Const. Bouvier. They met for an hour. Det Const. Bouvier asked him questions from a printed sheet and gave him a document requesting further information. Mr. White was asked if a 30 day response time was adequate. He agreed except for 5 years of income tax assessments.

199. Det. Const. Bouvier asked Mr. White who worked for him. Mr. White replied that his staff was not stable so he told Det. Const. Bouvier who was the stable staff.

200. When he made the Application in December 2006, Mr. White said he had not hired a bar manager. Therefore he put “self” as managing the business on page 20 of 21 of the application.

201. Mr. White said he explained Mr. Zein’s role to Det. Const. Bouvier. Mr. Zein was his maintenance person. Due to the sub-lease, Mr. Zein wanted to remain in a maintenance capacity. As Mr. White needed maintenance help, the arrangement worked out well.

202. Mr. White said he asked to meet with Mr. Georgopoulos in early March 2007 to introduce himself and get an appreciation of outstanding issues and how to deal with any future problems.

203. Mr. White thought the meeting went well. Mr. Georgopoulos told him he had no problems with Backstage. Mr. White told Mr. Georgopoulos he was applying for a liquor licence and this would be a solution to the problems. He was surprised by Mr. Georgopoulos’ letter of March 8 to the AGCO.

204. Mr. White said he met with Mr. Yugin between September and December 2006. He initiated the meeting as the owner of Backstage. No problems or concerns were discussed.

205. After his complaint to the AGCO regarding the Application, Mr. White again met with Mr. Yugin. Mr. White was angry because Mr. Yugin’s letter (part of Ex.1) was not reflective of the actual situation.

206. Mr. White tried to work it out with Mr. Yugin to have him withdraw his objection. Music from Backstage was his primary complaint. Also, events at Backstage where people loitered in front of Avant Garde were a source of concern to Mr. Yugin.

207. To try to satisfy Mr. Yugin, Mr. White said he put a sound proof wall inside the Premises. He also put 2 people on the Besserer Street door – one checked for identification and the other insured patrons in line or those outside for a cigarette did not stand in front of Avant Garde.

208. Mr. White referred to Exhibits 9, 10 and 11. He said his recollection of the order of them was that Ex.9, the MOU, was signed before EX.10 (the letter signed by Messrs. White and Zein). Ex.10 was prepared and signed after Mr. Yugin wanted more than that in the MOU (Ex.9).

209. Mr. Yugin was still not satisfied. Mr. White said Ex.11 (addendum to lease agreement) was prepared effective March 23, 2007.

210. Mr. White stated that the doors to the Premises at 137 Besserer Street, constitute the main entranceway to Backstage by architectural design. It has a large foyer and makes the collection of a cover-charge and the searching of patrons entering fairly easy.

211. OPS told Mr. White to have patrons searched. It is hard to do at the Rideau Street entrance which is smaller. For less busy nights, Mr. White said he could use the Rideau Street entrance only.

212. Mr. White said he stopped operating Backstage in mid – April 2007. The Premises are still available to be leased. He can work directly with the owner of the building as his agreement with Mr. Zein (Ex.8) has expired.

213. Mr. White said he can work with both Mr. Georgopoulos and Mr. Yugin. Regarding Mr. Zein, Mr. White said he did not know about his criminal record. If he had known, he would have “dumped him”. They are no longer involved in any business relationship.

214. In answer to questions on cross-examination by Ms. Taylor, Mr. White said since June 2007 he has been working full time. His job has nothing to do with the service of alcohol. He graduated from university in 1997.

215. Mr. White stated he has no experience operating a nightclub. He knew that nightclubs in Ottawa open and close all the time. He agreed it was reasonable to say it would be a risky business especially for someone who has no experience.

216. Mr. White said that not supplying the master lease to Det. Const. Bouvier was an oversight on his part.

217. In December 2006, the AGCO sent Mr. White a letter after his Application setting out a list of things the AGCO required. One question asked who the landlord was.

218. Mr. White said he responded to the letter in January. A copy of his response was placed into evidence as Ex.14, stating that the Premises were leased from Angelo Seccaspina. Mr. White said he did not have a relationship with the owner of the building at that time.

219. Mr. White said he told Det. Const. Bouvier that Mr. Zein had a title in his business of Maintenance Manger. Mr. Zein was there to do walk through with inspectors and answer questions. It was quite possible Mr. Zein was in the office when ever Det. Const. Bouvier called looking for Mr. White.

220. At their February 28, 2007 meeting, Mr. White said Det. Const. Bouvier asked him for the names of staff. Mr. White did not know the last names of some of them. He did give Det. Const. Bouvier the names of 5 permanent staff.

221. Mr. White said he paid staff on a regular basis in cash. Payroll deductions were “being captured” by his financial records, Mr. White said.

222. Regarding supplies, Mr. White said none were delivered, that he makes purchases himself.

223. Mr. White said that although the Application shows capacity at 1,000, he was told by local inspectors his capacity was 440. Mr. White said the Premises are never full. He buys enough to serve 200 people from 1 a.m. to 8 a.m.

224. Mr. White says he does not know what level of hourly or monthly sales he needs to break even. Mr. White said he is more concerned with monthly figures not nightly. He did not bring any financial information with him, and none has been disclosed.

225. A floor plan of the Premises supplied by Mr. White was placed in evidence as Exhibit 15.

226. Regarding Exhibit 9 (the MOU), Mr. White said Mr. Yugin typed it up. Mr. Yugin believed Mr. Zein was part of Backstage and wanted his signature on something.

227. Mr. White said leaving Mr. Zein in the leasing arrangement was strategic. The sublease was for 1 year whereas the master lease was for 3. That agreement has since been cancelled.

228. Mr. White said Mr. Seccaspina has agreed to lease the Premises to him for 1 year pending the outcome of this hearing. It is a verbal commitment only.

229. In answer to questions from Mr. Douglas on cross-examination, Mr. White said Mr. Zein did not explain his operating problems to him. Mr. White did not ask, nor has he spoken to other bar owners.

230. Mr. White explained his original business model was to be unlicensed, following a Toronto or Montreal model. Revenue was to be earned from cover charges and patrons paying for international D.J.’s. But patrons did not come.

231. Mr. Zein was paying $6,000 per month under his lease. Mr. White picked up that obligation. His rent will increase to $13,000 per month once he obtains his liquor licence.

232. Mr. Zein said he has not remitted source deductions and E.I. premiums. They are not current. Corporate tax returns are being completed and other information is being prepared. Mr. White said provincial sales tax has been paid.

233. Mr. White said he would abide by conditions if placed on the licence by the Board. He said that while he could use the Rideau Street entrance, he could not do it exclusively out of his concern for safety.

234. Mr. White said staff could be placed outside to assist with a line-up. Regarding noise, Mr. White said he would abide by City of Ottawa by-laws. Doors on Besserer Street could close automatically.

235. Mr. White said he could agree to prohibit Mr. Zein from the Premises.

236. Mr. White said if he gets his licence, he would cease using the Premises as an after-hours club for people under 19. There would be no entry for people under 19 at any time.

237. Also, if given a licence, Mr. White said light meals which can be easily heated would be available. He would buy a refrigerator to keep frozen foods.

238. In answer to questions from the Board regarding his finances, Mr. White said he has $6,000 in savings and he could raise $10 to 15,000 through his family. He said he would finance the operations of the business out of cash flow.

239. Mr. White said he would agree to a condition that Mr. Zein would have no contractual relationship with the business.

Registrar’s Submissions

240. Ms. Taylor began her submissions by referring to the NOP and specifically paragraphs 5(b),(c), and (d). Ms. Taylor said that if the Board makes findings on any paragraphs 6(2)(d), 6(2)(e) or 6(2)(f) of the Act, the Application must be refused. Her submissions are based on the 2004 Divisional Court decision in Ontario (Registrar of Alcohol and Gaming) v. Hosseini-Rad.

241. The Hosseini-Rad decision concerned an application for a licence. In that case, the Board found the applicant had breached ss.6(2)(e) but found there were circumstances in which the licence should be granted. The Divisional Court overturned the Board’s decision saying that if there was a finding under subsection 6(2)(a) to (g) of the LLA, there was no discretion to grant the application.

242. Regarding the allegation in the NOP relating to paragraph 6(2)(f) of the Act, Ms. Taylor said there is evidence of permitting controlled substance on the Premises, and failing to provide things relevant for an inspection under the Act. These are contrary to subsection 45(1) of the LLA and subsection 45(2) of the Ontario Regulation 719/90 (“O.Reg”), respectively.

243. On February 18, 2007, OPS went into the Premises and saw wide-spread evidence that patrons were using ecstasy and other controlled substances. No one was being searched. On the balance of probabilities, it is a logical conclusion that drugs were being used in the Premises.

244. None of the staff did anything about people who were under the influence of narcotics. This shows a culture within the establishment of turning a blind eye towards drug-using patrons or a tacit acceptance of the use of drugs.

245. The officers pointed this out to Mr. White, but there is no evidence he did anything to deal with the patrons after that.

246. Between February 18 and March 13, Mr. White met Det. Const. Bouvier and was aware that an investigation into the Application was underway. But shortly after on March 3, a serious drug issue took place in the establishment.

247. Ms. Taylor said it is the Registrar’s position that Ms. Burnett did take GHB in the establishment. That is what Ms. Tessier believes, expressing a lot of guilt in her testimony because she left to go to a downstairs bathroom for 10 minutes.

248. Ms. Tessier gave a statement to Const. Singh that a black male admitted to her that he gave Ms. Burnett GHB, a controlled substance. The Applicant permitted this when it acquiesced by failing to prevent the activity.

249. Ms. Taylor said that the violation of subsection 45(1) of the LLA occurred from the evidence of Det. Const. Bouvier of all the things he did not received from Mr. White after asking for them. No business banking information was submitted for the corporate Applicant.

250. In his interview, Mr. White told Det. Const. Bouvier that he owned no property and was renting an apartment. When he finally furnished some documents, Mr. White gave mortgage information. He had obtained the mortgage in January 1997. There was no address of the property, nor any supporting documentation.

251. Several months of personal bank statements were missing from the documents Mr. White gave to Det. Const. Bouvier. These were never provided.

252. Mr. White provided a sublease for the Premises but not the head lease. Also in the application Mr. White said he would manage the Premises, yet he told Det Const Bouvier that Jason Wong would be the manager. No personal history report for Mr. Wong was ever submitted.

253. Ms. Taylor said it is not up to the Registrar’s investigators to chase the Applicant once a request for information has been made. It is the Applicant’s obligation to comply. Mr. White failed to do so.

254. Regarding a finding on paragraph 6(2)(e) of the LLA, making a false statement in the Application, Ms. Taylor said the evidence clearly shows Mr. White never had any intention to self manage the establishment. Mr. White has a full time position elsewhere.

255. Mr. White said he would set up a management team. When he was running raves, Tony Zein was at the establishment to look after inspections because Mr. White had other things to do. This was his explanation as to why Tony Zein answered the Backstage telephone when Det. Const. Bouvier called to speak to Mr. White.

256. Ms. Taylor said the evidence showed that Mr. Zein is involved in the establishment and this was not disclosed in the Application.

257. Mr. Yugin’s evidence was clear on this point. He thought Mr. White may be involved somehow, but that Tony Zein was the main man behind the establishment. This also accords with the information received by Const. Bujold of the OPS who received the same information from street kids about Backstage.

258. Mr. White did not mention Mr. Zein when asked for a list of employees. Only when he was confronted with the conversation between Det. Const. Bouvier and Mr. Zein did Mr. White come up with the same explanation that he had to make Mr. Zein the assistant manager as a condition of their sublease arrangement.

259. However, in reviewing the sublease (Ex.14), there is nothing it requiring Mr. Zein to be an assistant manger of the establishment.

260. Ms. Taylor continued that while Mr. White is good at making the right noises when confronted with an issue, one cannot trust what he says. He would say whatever he has to in order to smooth things over. As an example, he told Mr. Yugin things would get better. But nothing changed. Mr. White’s promises were deceiving.

261. Mr. White told OPS officers on February 18 that he would take corrective measures, but there was no evidence, any were in fact taken.

262. Mr. White said every patron was searched on the way in to the Premises. Then why, Ms. Taylor asked, did OPS not see searches being carried out, including on neither Redline motorcycle gang members.

263. Mr. White saw no problem in providing documents to Det. Const. Bouvier in a 30 day period but did not do so. It was only after 2 follow up calls by Det. Const. Bouvier that Mr. White provided some documents and information, but not all.

264. Ms. Taylor referred to the Board’s decision in Elektrowerkz Café, stating that this case had facts similar to the Backstage Application and provided a useful precedent.

265. Ms. Taylor stated that there is no evidence that Mr. White has a direct contract with the landlord of the Premises, although he testified that he had a verbal agreement. For any applicant to get a licence, the applicant must be in control of the premises and the business to be carried on in them. In this case said Ms. Taylor, there is no evidence of either.

266. Ms. Taylor said that Mr. White is naïve about the costs of the business and the credit that is required. Det. Const. Bouvier testified as to Mr. White’s Equifax credit report. He had had loans written off.

267. Ms. Taylor asked how Mr. White can start his business with a capacity of 1,000 people with $6,000 in personal savings. This is being naïve in the extreme. The cost of stocking a bar for the fist weekend he is open would cost Mr. White more than $6,000.

268. The cost of a dispensing system, system to control sales – how is Mr. White going to pay for these. There is no business plan, so there are no answers to these questions.

269. Regarding paragraph 6(2)(d) of the LLA, Ms. Taylor said there is ample evidence to support the Registrar’s position that if licensed, the business would not be carried on in accordance with paragraph 6(2)(d) of the LLA.

270. There were breaches of the LLA in that controlled substances were permitted in the Premises.

271. Mr. White’s track record in failing to follow through on his commitments give reasonable belief that the business will not be carried on in accordance with the law and with integrity and honesty.

272. Ms. Taylor said that her previous point re failing to provide documents, failing to provide financial information, failing to provide names of other managers, failing to put Mr. Zein’s name on the Application, listing himself as the 100% owner. All have been proven to be false statements on the Application.

Les Suites Hotel’s Submissions

273. Mr. Douglas submitted the Application fails to meet the tests in either paragraph 6(2)(a) or 6(2)(h) of the LLA.

274. Mr. Douglas said that while the NOP contains no allegation about paragraph 6(2)(a) of the LLA, the evidence at the hearing is a valid concern and a reason for not issuing a licence to the Applicant.

275. Mr. White’s evidence regarding his business operation in the location was that he paid cash to the staff, has not remitted any source deductions, GST or corporate tax. These past failures are a good indication the Applicant is not financially responsible.

276. Regarding paragraph 6(2)(h) of the LLA, Mr. Douglas said it is Les Suites Hotel’s position that no licence should be issued. The clientele wants quiet enjoyment, but guests of the hotel constantly complain about the noise on Besserer Street from patrons at 137 Besserer.

277. Mr. Douglas referred to the decision of the Ontario Court of Appeal in Major Mack Hotel. in support of his submissions and directed the Board’s attention to paragraphs 14, 15 and 16 of the decision.

278. The evidence of Mr. Yugin and of Les Suites Hotel was that there was noise, disturbances, profanity, urinating, defecating, all on Besserer Street outside of the Backstage entrance. This has disturbed guests of Les Suites Hotel and patrons of Mr. Yugin’s establishment.

279. An establishment of this size, according to Mr. White’s evidence, needs an entrance on Besserer Street.

280. Regarding searches of patrons, there is a difference of opinion. Mr. White said everyone is searched. Officers of the OPS, when there, did not observe any searches. Mr. White must ensure that the law will be abided by.

281. Mr. Douglas said that if the Application for a licence is granted, conditions should be placed on it. He suggested the following conditions:

a) the Besserer Street door should not be used expect for emergency;

b) there should be no Backstage signage on Besserer Street. This should be restricted to Rideau Street;

c) any Backstage advertising and promotional material should only show a Rideau Street address;

d) regarding noise, there should be a maximum permissible level outside;

e) the doors should be closed at all times except to permit the exit and entrance of people;

f) there should be sufficient staff outside the Rideau Street door trained to regulate line-ups so no doors will be blocked;

g) Mr. Zein should be prohibited from being in the Premises; and

h) all people entering the Premises should be searched.

282. Mr. Douglas said that, notwithstanding the above list of conditions, it is the position of his client that the Application should not be granted.

Applicant’s Submissions

283. Mr. Smith stated that paragraph 6(2)(a) should not be applicable to this Application because it was not alleged by the Registrar in the NOP.

284. Regarding the theory that Mr. White is a front for Tony Zein, what happened to Mr. Zein, re his criminal record, occurred in 1995, a long time ago. There was no evidence that Mr. White was involved in any illegal activity. A condition could take care of this issue. Such condition should cover no business involvement of Mr. Zein, but he should not be restrained from being present in the Premises.

285. Mr. Smith said the evidence at the hearing does not support the allegations of the Registrar.

286. Mr. White is a public servant who has an opportunity to run the establishment. He took the opportunity. He tried to run it effectively, smoothly and in accordance with the law. He realized he needed a liquor licence, so he applied. His evidence was forthcoming. He is aware of the situation. He is prepared to follow all the rules and regulations.

287. Mr. White has made attempts to work with Les Suites Hotel and with Mr. Yugin. They had meetings and discussions. He signed documents for Mr. Yugin.

288. Mr. Smith said that regarding Mr. White’s ability to manage, Mr. White was there when OPS arrived on both occasions they referred to in their evidence. The business was not open every day. Mr. White did manage the business and will be significantly involved in the management if the licence is granted.

289. If a licence is granted, Mr. White knows he must have a lease. At the moment he has an understanding with the landlord.

290. Mr. White knows that OPS will attend the establishment to ensure compliance with the LLA. He would be naïve to think otherwise.

291. Regarding the public interest aspect of the NOP, Exhibit 13 setting out noise complaints, refers to other past operators in the premises. Problems have not been caused by Backstage while Mr. White has operated it.

292. Mr. Smith said that the concerns expressed at the hearing can be assuaged with conditions which the Panel can impose. Conditions can satisfy the interest of the public, but should not tie the hands of Mr. White or his business. That would be unfair.

293. Regarding patrons being searched, any condition about that should not be too onerous.

294. Mr. Smith took exception with Ms. Taylor’s arguments that on both February 18 and March 3, 2007, drugs were being used or dealt with in the establishment. There was no evidence that Mr. White was permitting it or letting it go on.

295. Mr. Tessier’s evidence was to the effect that when the event took place on March 3, 2007, the staff and Mr. White got involved. Mr. White went to the hospital to ensure the young lady was all right, and drove her home from the hospital. This said Mr. Smith shows Mr. White’s good character.

296. Mr. Smith referred the Board’s decision in Cue's Whole 9 Yards and specifically the discussion commencing at page 7 of that decision.

297. Mr. Smith said if the licence is not granted outright, then it should be granted with conditions.

Registrar’s Reply

298. In reply, Ms. Taylor said that a noise condition referring to decibel levels cannot be enforced. Instead a condition could be imposed similar to condition 4 imposed by the Board in its decision in Cue’s Whole 9 Yards.

299. Ms. Taylor said Cue’s Whole 9 Yards dealt with public interest. In that case the Registrar took no position. In the present case, there is a past conduct allegation, false information on the Application and other allegations, prompting the Registrar to take the position that the Application should not be granted.

300. While there was no evidence of Mr. White being involved with illegal activity, Ms. Taylor said that since Mr. Zein would not qualify for a licence, Mr. White made the Application. Mr Zein has a criminal record, and this would have stopped him from obtaining a licence.

301. Regarding the argument that Mr. White will operate within the law, Ms. Taylor said that he failed to control activity in the past in the establishment, and this leads one to conclude there are reasonable grounds to believe that he cannot do so in the future.

Les Suites Hotel Reply

302. Mr. Douglas in reply stated that the Board can either look at paragraph 6(2)(a) of the LLA or not in rendering its decision. Although not alleged in the NOP, the Registrar despite requesting financial information from Mr. White did not receive much. Information came out of Mr. White’s evidence regarding his finances and that is why Mr. Douglas said he is raising paragraph 6(2)(a) of the LLA now.

303. Regarding the approaches Mr. White made to his client, Les Suites Hotel, Mr. Douglas said this occurred only after Mr. White saw there were problems.

Decision/Reasons and Orders

304. In Hosseini-Rad, Mr. Justice Ferrier writing for the Court said at paragraph 13:

We are of the view that once the Board has made a finding under s. 6(2)(e) that the respondent (the applicant for the licence) made a false statement in his application, there is no discretion in the Board to grant a licence, with or without conditions. Nowhere in the statutory or regulatory framework is such discretion conferred. On the contrary s. 10(2) makes the determination absolute. Such an applicant is disentitled to a licence.

305. The Applicant in this case has applied for a licence to sell liquor under s. 6(1) of the LLA not a liquor delivery service licence. However, the wording of s. 6(2) and s. 10(2) is almost identical. Given the ruling in the Hosseini-Rad decision, if the Board makes a finding under any of the paragraphs of the LLA set out in the NOP, the Board is of the view that it has no discretion to issue a licence, with or without conditions.

Paragraph 6(2)(f) of the LLA

306. While the Board will address each of the paragraphs of s. 6(2) of the LLA as set out in the NOP, paragraph 6(2)(f) of the LLA and the alleged contravention of subsection 45(2) of the O.Reg regarding a controlled drug or substance stand out as determinative.

307. There were 2 dates for which evidence was given about controlled drugs or substances being on the premises. These were the nights of February 18 and March 3, 2007.

308. Several OPS officers gave evidence regarding their presence in the Premises on February 18, 2007. Const. Stephan Bujold testified about 2 males in the Rideau Street-side hallway, both showing signs of being high on drugs, one of whom admitted to Const. Bujold that he had taken psilocybin, a controlled substance.

309. Further down the hallway, Const. Bujold encountered a 3^rd male who admitted using ecstasy and having smoked a marijuana cigarette, both controlled substances. Inside the Premises, Const. Bujold testified about patrons with ecstasy soothers in their mouths.

310. Const. Jason Savory confirmed that Const. Bujold had shone a flashlight to try to have a person’s pupils dilate, but this did not happen. Non-dilation is confirmation that a person is high on drugs. Const. Savory said that several persons he talked to were, in his opinion, high on drugs.

311. Const. James Ritchie testified that upon opening the Rideau Street door, it bumped into someone. One of the people standing in the alcove just on the outside of the door was smoking a marijuana cigarette, and Const. Ritchie placed that person under arrest.

312. On the night of March 3, 2007, Ms. Tessier and Const. Paramjit Singh of the OPS were in the Premises, and gave evidence about their experience involving Sara Burnett who became ill, passed out and had to be taken to hospital.

313. Ms. Tessier said that she and Ms. Burnett had been at another club earlier that night and had consumed alcohol there. They had arrived at Backstage by 3:30 a.m. Ms. Burnett was dancing on the dance floor prior to Ms. Tessier going downstairs to use a washroom. 10 minutes later when she returned, Ms. Tessier stated that Ms. Burnett could not stand up, her eyes were closed. Basically Ms. Burnett was out cold. This was confirmed by Const. Singh.

314. Ms. Burnett was taken by ambulance to a hospital. There, later that morning, Ms. Burnett told Ms. Tessier “she had taken pills”.

315. Const. Singh’s evidence was that Ms. Tessier told him that a male had been with Ms. Burnett in the Premises. The male told Ms. Tessier that Ms. Burnett was, “f…ed up”. Ms. Tessier gave a description of the male to Const. Singh.

316. Const. Singh said Ms. Tessier told him she confronted the male, asking him what he had given to Ms. Burnett. The male answered “G”, an acronym for GHB, or ecstasy, the date rape drug, a controlled substance. The male had left the scene.

317. Const. Singh testified that Ms. Tessier was not 100% sober but was not intoxicated. She seemed coherent to him and in what she told him.

318. Based on all of this evidence which was uncontested and given in a forthright and credible manner by Ms. Tessier and by several police witnesses, the Board FINDS that patrons in the premises and in an area under the exclusive control of the Applicant were permitted to hold or consume controlled drugs or substances, contrary to s. 45(2) of the O.Reg.

319. Accordingly, the Board FINDS the Applicant is not entitled to a liquor licence on the basis of paragraph 6(2)(f) of the LLA, and the application is therefore DENIED.

Paragraph 6(2)(d) of LLA

320. The Board FINDS reasonable grounds to believe that the business will not be carried on in accordance with the law and with integrity and honesty. The evidence of controlled substances in the Premises while the principal of the Applicant, Mr. White, was the person in charge of the Premises, raises serious doubts the Applicant understand his obligations to carry on the business in accordance with the law and with integrity and honesty.

321. Second, in his dealings with Det. Const. Bouvier, Mr. White was not forthcoming with information in a timely or forthright manner. Det. Const. Bouvier had to call Mr. White regarding the delays for information. When he did submit some information, it was slip shod and incomplete, and in some instances inaccurate. An example of the latter is that Mr. White said he owned no property, but later disclosed a mortgage payable without, as requested, indicating anything about the property. Mr. White withheld, concealed or refused to provide information to Det. Const. Bouvier contrary to s.45(1) of the LLA. This finding further supports the Board’s conclusion the business will not be carried on in accordance with the law and with integrity and honesty.

Paragraph 6(2)(e) of the LLA

322. The evidence concerning Mr. Zein’s possible involvement with the Applicant or its business was inconclusive. A condition prohibiting Mr. Zein form having any involvement with the Applicant or its business and a condition requiring the Applicant to have a direct lease with the landlord of the Premises, had the Application been granted, would have taken care of this concern.

323. Although Mr. White was somewhat circumspect and evasive in his dealings with Det. Const. Bouvier, especially regarding his financial status and that of the Applicant, had the Application been granted, a condition limited capacity to a more manageable size for Mr. White initially of say 250 would have given Mr. White the ability to prove that he could handle the business from financial and management perspectives. In the circumstances, the Board DISMISSES the allegations related to paragraph 6(2)(e).

Paragraph 6(2)(h) of the LLA

324. Having found the Applicant in contravention of subsection 6(2)(d) and(f), and given the consequences of that finding on the Application, the issues with respect to paragraph 6(2)(h) need not be determined. Had it been possible to grant the Application the Board is satisfied conditions could have been attached to the licence to meet the concerns expressed by Mr. Yugin and Mr. Georgopoulos. For example, the Besserer Street door could have been ordered not to be used expect as an emergency exit, a security person could be assigned to the outside of that door to assure no noise or loitering close to it, and the Applicant might have been required to have a known and staffed telephone number at the Premises during operating hours for use by Mr. Yugin and by Les Suites Hotel in the event of concerns and complaints.

Paragraph 6(2)(a) of the LLA

325. The issue of an alleged violation of paragraph 6(2)(a) of the LLA was raised by Mr. Douglas during the hearing, and not by the Registrar in the NOP. As such, it is not properly in issue in this matter and therefore the Board has not considered it in making its decision.

Conclusion

326. The Board, having made findings under paragraphs 6(2)(d) and 6(2)(f) of the Act, DENIES the Application by 6607543 Canada Inc. operating or intending to operate as BACKSTAGE NIGHT CLUB, 137 Besserer Street, Ottawa, Ontario, K1N 6A7, establishment number 802794.

DATED AT TORONTO THIS 12^th DAY OF MAY, 2008.

DAVID C. GAVSIE, CHAIR

DCG/sm