Registrar, Alcohol and Gaming Commission of Ontario v. 1412407 Ontario Inc. O/A Cottage Restaurant & Lounge, 2008 CanLII 52553

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 of Ontario

Registrar

-and-

1412407 Ontario Inc. O/A Cottage Restaurant & Lounge

Licensee

DECISION on finding

Panel: Eleanor Meslin, Board Member, Chair of the Panel Jacqueline Castel, Board Member

Decision Date: August 13, 2008

Hearing Location: Toronto, Ontario

Alcohol and Gaming Commission of Ontario 90 Sheppard Avenue East, Suite 300 Toronto ON M2N 0A4 Phone: (416) 326-0366 Fax: (416) 326-5566 Toll Free In Ontario: 1-800-522-2876 Website: www.agco.on.ca

Appearances

Registrar, Alcohol and Gaming Commission ) Daniel Alakas, Representative

1412407 Ontario Inc., Licensee ) John Chernet, Representative

Authorities

Sin City Bar v. Registrar (Unreported, Court File No. 483/07, 2008-05-02)

Allegations

1. A hearing into a Notice of Proposal (“NOP”) number 16121 dated March 13, 2008, to suspend liquor licence number 802256, issued to 1412407 Ontario Inc., (the “Licensee”), operating as COTTAGE RESTAURANT & LOUNGE, 1220 Danforth Avenue, Toronto, Ontario, M4J 1M6, (the “premises” or the “establishment”), on the basis of alleged violations of subsection 45(1) of the Liquor Licence Act (“LLA”) and section 29 and subsections 45(1) and 34(1) of Ontario Regulation 719/90 (“O.Reg”), prescribed under the LLA, was held on July 28, 2008 in the City of Toronto.

Decision

2. The Board FINDS that the Licensee contravened subsection 45(1) of the LLA and section 29 and subsections 34(1) and 45(1) of the O.Reg. Reasons follow.

Preliminary Matters

3. Mr. John Chernet, the manager of the establishment, requested an adjournment because the Licensee’s counsel, the Licensee and the Licensee’s witnesses were unable to attend. The Licensee is out of the country, and one of the witnesses is in Georgia.

4. Mr. Alakas indicated that the Board adjourned the hearing scheduled for July 11, 2008 because Licensee’s counsel was unable to attend the hearing, even though a prior written request to adjourn the July 11, 2008 hearing had been denied by the Chair of the Board of the Alcohol and Gaming Commission of Ontario (AGCO). On July 11, 2008, the Board had indicated that the new hearing date of July 28, 2008, would be peremptory for the Licensee. This is the second time the Registrar’s witness has cleared his schedule to attend a hearing, and it would appear as though the Licensee’s counsel is attempting to ignore an order of the Board. Mr. Alakas presented the Board with a letter dated July 28, 2008, from Mr. Mitchell Worsoff, Licensee’s counsel, requesting that the hearing be rescheduled to specified dates in October 2008, November 2008, December 2008, or January 2009. Mr. Alakas stated that the Licensee had previously disclosed in writing that it would be calling zero to two witnesses.

5. The Chair of the hearing (“Chair”) reiterated that on July 11, 2008, the Board told Mr. Chernet, in no uncertain terms, that the hearing would take place on July 28, 2008, and that if his counsel was not available, the Licensee would need to retain another counsel or be prepared to represent himself. The Board also directed Mr. Chernet, on July 11, 2008, to communicate same to the Licensee and his counsel. The Chair asked Mr. Chernet whether he had communicated the Board’s instructions to the Licensee and his counsel. Mr. Chernet responded that he had communicated the information to the Licensee and his counsel. Nevertheless, counsel advised he was still unavailable. Mr. Chernet further opined that two weeks is an insufficient amount of time to find another counsel. The Chair asked Mr. Chernet whether he had the authority to represent the Licensee at this hearing. Mr. Chernet responded that the Licensee had given him this authority.

6. The Board DENIED the Licensee’s request for a second adjournment of the hearing on the grounds that there has been no denial of natural justice and that, in the interest of justice, and the public interest, hearings cannot be unduly delayed because a Licensee’s counsel is too busy. Prior to the July 11, 2008 hearing, by correspondence dated May 23, 2008, the Licensee’s request for an adjournment had been denied. At the July 11, 2008 hearing, when Mr. Chernet arrived without counsel and requested an adjournment, the Board conveyed its concern that the Licensee appeared to be trying to avoid a prior decision, refusing an adjournment, of the Chair of the Board. It was made abundantly clear to Mr. Chernet when the Board agreed to adjourn the hearing of July 11, 2008 that the July 28, 2008 hearing was being scheduled on a peremptory basis and the meaning of same was clearly explained to the Licensee. The Licensee is entitled to be represented by counsel at hearings before the Board, but not by a specific counsel. The additional two weeks following the July 11, 2008 hearing and the May 23, 2008 denial of the adjournment request is a reasonable amount of time to retain another counsel, if the Licensee’s chosen counsel was not available to attend the hearing. There is no evidence that the Licensee made any attempt to obtain other counsel who would be available. The case also did not involve complex legal issues which would have required lengthy preparation. There were no other extraordinary and exceptional circumstances raised by the Licensee as to why the scheduled peremptory hearing should not proceed. The Licensee and/or his counsel are clearly ignoring the Board’s direction in an attempt to achieve what the Licensee’s counsel initially requested: delay the hearing until a specified date between October 2008 and January 2009. The Board also noted that Mr. Chernet did not raise any issues about the availability of witnesses on July 11, 2008; the only issue raised at that time was the availability of counsel.

Registrar’s Evidence

7. Detective Sergeant (“D/Sgt”) Christopher Higgins is a police officer with the Crime Unit of 54 Division, Toronto Police Services. He was working in uniform on August 4, 2007. He arrived in front of the establishment at 3:50 a.m. in a marked police vehicle. His intent was to check whether the establishment was closed and, if not, to conduct an inspection. He stopped his vehicle in front of the establishment on the opposite side of the street. The street is well lit from both street lights and signage, so he had no problem seeing what was going on across the street. D/Sgt Higgins explained that there are other small bars, which would hold approximately 20 to 30 people and retail businesses in the area. With the exception of the establishment, all of the other bars and businesses in the area were closed.

8. D/Sgt Higgins could not see the front door of the establishment, which is in an alcove, from his vehicle across the street. There are two iron gates in front of the establishment, and he knows from prior experience that when the establishment is closed, the iron gates are closed and locked. He observed that the iron gates were open.

9. He observed a group of over 20 people in front of the establishment. Normally, at this time of the morning, the street would be empty. He observed that two males in front of the establishment were drinking from bottles of beer. He observed a vehicle in front of the establishment facing westbound which he knew, based on prior dealings, belonged to Mr. Chernet. D/Sgt Higgins subsequently observed three males exit the bar with beer bottles in their hands. He made eye contact with them from his police vehicle and they immediately went back inside.

10. D/Sgt Higgins then exited his vehicle and walked to the front door of the establishment. There was no security or other staff at the exterior of the front entrance. He observed a male with a black dress shirt and black pants pull the door closed and he heard the door being locked, just as he approached the door. The gates remained open. D/Sgt Higgins testified that he has no doubt in his mind that the male, who closed the door, saw him coming and was closing the door to obstruct his inspection. There was a black covering over the door, so he could not see inside. He could hear loud music in the establishment. He tried knocking on the door, but got no response.

11. Of the numerous individuals standing around outside the establishment, D/Sgt Higgins observed that three males were very intoxicated. They were unsteady on their feet, loud, obnoxious towards each other, and stunk of booze. He observed them enter a Beck taxi cab which headed westbound on Danforth Avenue.

12. There is another entrance to the establishment at the back of the building which leads to a laneway. D/Sgt Higgins drove through the laneway to see if the door was open. The door is made of solid steel and has no handle. It was closed.

13. At 4:02 a.m., D/Sgt Higgins received an emergency call on his radio concerning a shooting. He immediately left the area to attend to that call. At 4:29 a.m., Constable Ryan Smith put over the broadcast that three males were fighting outside 752 Danforth Avenue. D/Sgt Higgins immediately proceeded to this location to assist Constable Smith and observed that it was the same three males he saw get into the Beck taxi earlier.

14. At 4:30 a.m. he returned to the establishment, at which time he observed an exodus of sixty to seventy people being herded like cattle outside the front doors of the establishment. A female in a yellow Ford Escape got out of her vehicle and told him, in an angry voice, that her husband was inside the establishment and she had been locked out, as the owner would not let anyone in or out until the police had left. The female asked the D/Sgt to leave, to ensure that her husband would be permitted to exit the establishment.

15. D/Sgt Higgins got out of his vehicle and walked to the front of the establishment. There were dozens of people outside in front of the bar. He observed five individuals leaving the bar and entering a Mazda Tribute. The driver, a female, was trying to pull out of the spot behind Mr. Chernet’s vehicle. D/Sgt Higgins observed her bump Mr. Chernet’s vehicle going forward and then, while reversing, bump the vehicle behind her car. As he approached the Mazda Tribute, everyone but the driver exited and tried to convince the driver to get out of the car as well. He could tell they had been drinking. The female driver then said, “We maybe drink too much. We take taxi.” She then hurried down the street. She was slurring, had glossy red eyes and was unsteady on her feet. He would have arrested her for impaired driving if she had been driving.

16. The door of the establishment was still locked, but it was now quiet inside. He stood at the door knocking for about twenty minutes but no one answered. He began knocking a few minutes from the time the last person exited. There were still people in front of the establishment trying to get taxis. He departed at 5:00 a.m., as it was apparent he was not going to gain entry. When he left, Mr. Chernet’s vehicle and the Mazda Tribute were still there. Everyone else had left.

17. D/Sgt Higgins returned to the establishment on August 4, 2007 at 9:43 p.m. He met with Mr. Chernet. D/Sgt Higgins was confused about Mr. Chernet’s status because Mr. Chernet told him in court in June 2007 that he was the owner. On August 4, 2007, Mr. Chernet told him he bought the business but the licence has not been transferred to him. D/Sgt Higgins issued a summons to Mr. Chernet to appear in court on behalf of the licensed premises on three charges: permitting liquor to be removed from the licensed premises; permitting drunkenness; and obstructing a police officer in carrying out an inspection under the LLA. He also prepared a report and forwarded it to the AGCO. He attempted to obtain information on the owner of the establishment but was unable to find anything.

18. Mr. Chernet declined to cross examine D/Sgt Higgins.

Licensee’s Evidence

19. Mr. Chernet declined to call any witnesses or to testify, asserting his right to counsel.

Registrar’s Submissions

20. The evidence of D/Sgt Higgins was clear, comprehensive and consistent. The Licensee bears responsibility for the conduct of his staff.

21. At 3:50 a.m., D/Sgt Higgins observed two males drinking from bottles of beer. Cottage Restaurant & Lounge was the only bar or restaurant open in the area, so the three males must have obtained the bottles of beer from the establishment. He also observed three other males exit the establishment carrying bottles of beer. This is clear evidence the licensee contravened subsection 34(1) of the O.Reg by permitting customers to remove liquor from the licensed premises. It is also evidence that the Licensee contravened section 29 of the O.Reg by failing to remove the signs of service by 2:45 a.m. If the signs of service had been cleared by 2:45 a.m., it would not be possible for the three males to exit the premises with bottles of beer after 3:50 a.m.

22. The door of the establishment was closed and locked moments before D/Sgt Higgins reached the door. The only reason the door was closed was to prevent D/Sgt Higgins from conducting an inspection. D/Sgt Higgins later heard from a patron that the door was locked to prevent the police from coming in, and no one was allowed to leave until they believed the police had gone. The Licensee clearly obstructed an inspection under the Act by refusing to allow D/Sgt Higgins to come in and conduct an inspection. This was exacerbated by the fact that patrons were prevented from exiting with concomitant safety ramifications. D/Sgt Higgins drove by the rear door and it was closed with no knob or handle. No reasonable Licensee would expect the police to obtain access through a back alley door. An inspection of the licensed premises was clearly prevented, in contravention of subsection 45(1) of the LLA.

23. D/Sgt Higgins is in the best position to observe drunkenness. He observed three males, a few feet away, who were very intoxicated: loud, obnoxious, even in front of a uniformed police officer. Another police officer was later dispatched to break up a fight by the same males. This conduct also goes towards intoxication. The driver of the Mazda Tribute could not pull out of her spot because of intoxication. She was slurring, unsteady on her feet and had glossy eyes. D/Sgt Higgins would have arrested her for impaired driving had she attempted to drive.

Licensee’s Submissions

24. Mr. Chernet said he wanted to ask, as a member of the public, why D/Sgt Higgins did not arrest the woman in the Mazda Tribute if she was intoxicated. The Chair reminded Mr. Chernet he was not here as a member of the public, he was here as the representative of the Licensee, and earlier he declined to ask D/Sgt Higgins any questions. Mr. Chernet declined to make submissions.

Analysis and Reasons

25. The Board questions the credibility of Mr. Chernet and is uncertain as to his role at the establishment. He told the Board he is the manager of the establishment. He told D/Sgt Higgins he was the owner of the establishment in June 2007. He told D/Sgt Higgins on August 4, 2007 that he purchased the establishment but the licence had not been transferred to him. The Board believes that Mr. Chernet was at the establishment on the morning of August 4, 2007, when the infractions which are the subject of this case occurred, as he is the manager and possibly the owner of the establishment, there were a large number of patrons in the premises, and D/Sgt Higgins recognized that his car was parked in front of the establishment.

26. Conversely, the Board found D/Sgt Higgins to be credible. His evidence was thorough, and there were no inconsistencies in his testimony.

[Subsection 45(1)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-l19/latest/rso-1990-c-l19.html) of the [LLA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-l19/latest/rso-1990-c-l19.html)

27. Subsection 45(1) of the LLA provides that no person shall obstruct a person carrying out an inspection under the Act, or withhold, destroy, conceal or refuse to provide any relevant information or thing required for the purpose of the inspection.

28. D/Sgt Higgins was wearing a police uniform and riding a marked police vehicle on August 4, 2007, when he attended at the establishment. As such, his identity as a police officer would have been readily apparent to staff and customers. D/Sgt Higgins observed three males exit the bar carrying bottles of beer and then, as soon as they made eye contact with him, they quickly re-entered. D/Sgt Higgins subsequently observed a male close the door of the establishment and heard the door being locked, just as he approached the door. He could hear music and customers in the establishment after the door was closed and locked. Clearly, given that there were still customers inside, the only reason the door was closed and locked, at the very moment D/Sgt Higgins approached, was to prevent the police officer from coming in and conducting an inspection under the LLA. Based on the other findings in this case, the Board infers that the Licensee was attempting to conceal the identities of the three males who removed the beer from the premises, evidence of beverage alcohol service which had not been cleared by 2:45 a.m., and perhaps intoxicated patrons. This represents a complete disregard for authority on the part of the Licensee.

29. A female customer later complained to D/Sgt Higgins that customers were not allowed to enter or leave the establishment until the police left. While the Board acknowledges that the female’s complaint constitutes hearsay, this evidence was consistent with what D/Sgt Higgins observed to be the case. When D/Sgt Higgins was presumably believed to have left, there was an exodus of approximately sixty or seventy customers from the premises.

30. Shortly after 4:30 a.m., D/Sgt Higgins again tried to secure access to the establishment by knocking on the door for approximately twenty minutes. Although it would appear that Mr. Chernet was still inside the establishment, given that his vehicle was still parked out front, he did not open the door.

31. Accordingly, the Board FINDS the Licensee, or his staff, obstructed a police officer from conducting an inspection under the LLA, by locking the door of the establishment just before the police officer arrived at the door and by refusing to open the door of the establishment on two occasions (first, shortly after 3:50 a.m., and then again, shortly after 4:30 a.m.), and by refusing to allow customers to leave until the police was believed to have departed.

Section 29 of the O.Reg.

32. Section 29 of the O.Reg provides that evidence of liquor that has been served and consumed shall be removed within forty-five minutes after the end of the period during which liquor may be sold or served, or by 2:45 a.m.

33. Given that D/Sgt Higgins observed three males exit the establishment carrying beer bottles shortly after 3:50 a.m., the Board FINDS the Licensee had not cleared all of the signs of service by 2:45 a.m. As the Registrar’s counsel noted in his submissions, it would not have been possible for the males to exit with bottles of beer at 3:50 a.m. if the signs of service had been removed by 2:45 a.m. D/Sgt Higgins was obstructed from determining whether there was other evidence of service on the floor of the establishment, since he was blocked from entering.

Subsection 34(1) of the O.Reg.

34. Subsection 34(1) of the O.Reg provides that the licence holder shall not permit a patron to remove liquor from the premises to which the licence applies.

35. D/Sgt Higgins testified that he observed two males drinking from beer bottles outside the establishment at 3:50 a.m. Since there were no other establishments in the area which were open at this time, the Board infers, on a balance of probabilities, that the males obtained the beer bottles inside the establishment and were permitted to exit the establishment with them.

36. D/Sgt Higgins did observe three other males exit the establishment carrying bottles of beer at 3:50 a.m., or shortly thereafter. He did not see any security or other staff at the exterior of the premises monitoring to ensure that staff do not remove liquor from the premises, and of course, he was not permitted inside to determine whether there was security or other staff at the interior of the doors performing this function. Either the licence holder did not have staff monitoring customers exiting the premises, to ensure compliance with the prohibition in subsection 34(1), or staff were posted at the exit and allowed the males to leave with the beer.

37. Accordingly, the Board FINDS the Licensee contravened subsection 34(1) of the O.Reg.

Subsection 45(1) of the O.Reg.

38. Subsection 45(1) of the O.Reg provides that the licence holder shall not permit, among other things, drunkenness to occur on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder. Therefore, for a finding under subsection 45(1), there is a two part test. First, it must be established that drunkenness occurred on the premises or any of the other specified areas under the exclusive control of the licence holder. Second, it must be established that the Licensee permitted the drunkenness.

39. Shortly after 3:50 a.m., D/Sgt Higgins observed three males outside the establishment exhibiting the following indicia of intoxication: unsteady on their feet, loud, and obnoxious towards each other, even in the presence of a police officer. He also testified that they “stunk” of booze. D/Sgt Higgins, who was very precise in his choice of words, described the males as “very intoxicated”. At approximately 4:30 a.m., these three males were spotted fighting outside 752 Danforth Avenue. While the fighting is not, in and of itself, a sign of intoxication, along with the other signs D/Sgt Higgins observed, it does point towards intoxication. D/Sgt Higgins did not testify that he observed these three men exit the establishment. However, given that the other bars and restaurants in the neighbourhood were closed, the Board is prepared to accept, on a balance of probabilities, that the three men became intoxicated in the establishment and exhibited the same signs of intoxication in the establishment. As such, the first part of the test under subsection 45(1) is met in respect of the three males.

40. Shortly after 4:30 a.m., D/Sgt Higgins also observed five individuals exit the bar and get into a Mazda Tribute. He testified that the female driver of the vehicle exhibited the following signs of intoxication: slurring speech; glossy red eyes, and unsteady on her feet. In the context of these signs of intoxication, the fact that she bumped both the vehicle in front of and behind her car, may also suggest she was impaired. The female also said, on exiting the Mazda Tribute, “Maybe we drink too much. We take taxi.” D/Sgt Higgins gave evidence that he would have charged her with impaired driving had she not exited the vehicle. Given that D/Sgt Higgins observed the female exit the establishment, the Board accepts, on a balance of probabilities, that she became intoxicated in the establishment and exhibited the same signs of intoxication in the establishment. As such, the first part of the test under subsection 45(1) is met in respect of the female customer as well.

41. For the second part of the test under subsection 45(1) the Licensee must be found, on a balance of probabilities, to have permitted the drunkenness. “Permit” means to allow, to acquiesce, by failure to prevent, or to expressly assent or agree to the doing of an act. The Divisional Court held in a recent case, Sin City Bar v. Registrar (Unreported, Court File No. 483/07, 2008-05-02) that for a finding that a Licensee permitted drunkenness, there must be evidence that the Licensee or its staff knew or ought to have known that the patrons were drunk.

42. The Licensee precluded D/Sgt Higgins from obtaining evidence on whether the Licensee knew the three males and female were drunk by refusing to allow him to enter the establishment. If he had been allowed in, he could have questioned staff about their interaction with or observations of the males. He would have also had an opportunity to observe staff’s interaction (if any) with the female customer and her behaviour in the establishment. The Board is therefore left to consider whether, on a balance of probabilities, it can infer that the Licensee or its staff ought to have known that the three males and the female were drunk.

43. The Licensee is required to have staff monitor for signs of intoxication amongst customers. Staff are required by law to attend an approved server training program. At this mandatory training, staff are taught that they must be aware of the quantity of beverage alcohol they are serving customers and that they must pace beverage alcohol service to reduce the risk of customers becoming intoxicated. Staff are also taught to recognize signs of intoxication and to engage customers in conversation when serving beverage alcohol, particularly where multiple drinks have been served to the same customer, to determine whether the customers are showing signs of intoxication. Given the blatant signs of intoxication the three males exhibited, the Board infers, in the absence of any conflicting evidence, that they were exhibiting signs of intoxication for some time. Clearly, the Licensee or its staff should have cut the three males off beverage alcohol service long before they began exhibiting such pronounced signs of intoxication. The Board also infers that the pronounced signs of intoxication they were exhibiting would have been immediately or quickly noticeable to staff. The Board is satisfied, on a balance of probabilities, that the Licensee or its staff, who were serving the males, should have known about the drunkenness and acquiesced to the drunkenness, by failing to prevent it. As such, the second part of the test under subsection 45(1) is met with respect to the three males.

44. While the Board accepts D/Sgt Higgins’ evidence that the female customer was intoxicated, he did not refer to her as “very intoxicated” or describe her as exhibiting the pronounced signs of intoxication which the males exhibited. Given that the Board has no evidence about the length of time she exhibited these signs of intoxication in the establishment or the level of interaction she had with staff, and given that the signs of intoxication she exhibited were less pronounced and might not be as quickly recognizable by staff, the Board has greater difficulty inferring, on a balance of probabilities, that the Licensee or its staff should have known about the female’s drunkenness. Once again, obstruction on the part of the Licensee, precluded D/Sgt Higgins from obtaining the necessary evidence. Consequently, the Board declines to make a finding under the second part of the subsection 45(1) test.

45. Accordingly, the Board FINDS that the Licensee contravened subsection 45(1) in respect of the three males, but not in respect of the female customer.

Conclusion

46. The Board FINDS the Licensee contravened subsection 45(1) of the LLA and section 29 and subsections 34(1) and 45(1) of the O.Reg.

47. The Board invites written submissions on penalty from the respective parties. The Registrar’s representative shall serve and file written submissions within ten (10) days of the date of this decision. The Licensee’s representative shall have ten (10) days to serve and file a written response. Registrar’s representative may serve and file any reply within five (5) days of the receipt of the Licensee’s response. All submissions are to be filed with the Manager, Hearings Department, Alcohol and Gaming Commission at the address on the front page of this decision in accordance with the Board’s Rules of Practice.

DATED AT TORONTO THIS 13th DAY OF August , 2008

JACQUELINE CASTEL, BOARD MEMBER ELEANOR MESLIN, BOARD MEMBER

JC/ee