Registrar, Alcohol and Gaming Commission of Ontario v. Mozie On In Diner Inc. (The), 2008 CanLII 52576

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-

Mozie On In Diner Inc. (The) O/A Mozie On In Diner (The) Licensee

DECISION

Panel: Joan Lougheed, Board Member Eleanor Meslin, Board Member

Decision Date: August 29, 2008

Hearing Location: Niagara Falls, 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 Mozie On In Diner Inc. (The), Licensee ) Ronald Harold Allan

Allegations

1A hearing into a Notice of Proposal number 15851 dated December 17, 2007, to revoke liquor licence number 805555, issued to Mozie On In Diner Inc. (The), (the “Licensee”), operating as MOZIE ON IN DINER, 60 Glendale Avenue, Niagara-on-the-Lake, Ontario, L0S 1J0, (the “Premises”), on the basis that the licence holder would be disentitled to a licence under section 6 of the Liquor Licence Act (“LLA”) or that the licence holder is in breach of a condition of the existing licence, was held on July 22, 2008, in the City of Niagara Falls.

Decision

2After considering all the evidence and submissions received, the Board REVOKES the liquor licence of the licence holder effective immediately, with reasons to follow.

Preliminary Matters

3Ronald Harold Allan is a shareholder, officer and director of the Licensee. Attending with Mr. Allan was his Manager, Shannon Donnett, who has worked with him for the past four years and is in attendance to support him.

Registrar’s Evidence

4Sean Kirkey gave evidence as a field collection officer with the Ontario Ministry of Revenue. He stated that his duties included resolving and collecting arrears for sales tax. He explained that it is an offence to fail to remit applicable sales taxes collected and in the course of his duties will entertain a Memorandum of Understanding (MOU) for payment of funds owing. He submitted Exhibit A, which contains records of the Vendor / Licensee’s account and an overview signed by B. Mantz, Collection Officer for the Ministry of Revenue.

5On June 8, 2007, an MOU was drawn up for Mosie On In Diner. A copy, signed by the Vendor / Licensee was not returned until August 8, 2007, and Mr. Kirkey stated that the terms of the MOU were already broken by this time. Attempts to reach Mr. Allan by phone or mail were not successful.

6Mr. Kirkey stated that the May 2007 payment of $2,765.61 was received, but the cheque was returned NSF. A debt collector attempted to contact Mr. Allan, but there was no response. A bank garnishee was issued in October 2007 and $4,000.00 was recovered from a bank account. Mr. Kirkey stated that it was at this time that the Licensee took steps to contact the debt collector.

7In giving evidence, Mr. Kirkey indicated that since the MOU was set up, the actions taken by the Licensee were sporadic, with failure to remit payments and the submission of late reports. At times there were late payments and at times reports were filed with no cheque enclosed. Attempts continued to be made to contact the Licensee to make other arrangements, but these attempts were unsuccessful.

8Mr. Kirkey stated he found the Licensee was taking the money and using it for the business operations. In his view, this had likely been occurring since February 2008. He had hoped to make other arrangements with the Licensee, since the current balance owing is $42,418.11, but he was not successful in making contact with Mr. Allan. The debt incurred has been accumulating from September 30, 2006, to the present.

9In answer to questions, Mr. Kirkey stated he wanted to set up an MOU to allow the Licensee to keep operating and not have his licence revoked. When asked to clarify details of the NSF cheques and amounts owing he stated:

• Licensee failed to file and remit $10,000.00 on November 2006, February 2007 and April 2007.
• 2 NSF cheques were received
  • $8561.00 May 2007
  • $2490.00 March 2008
• $1500.00 cheque received for December 2007
• $1870.32 cheque received May 2008 for the February 2008 RST due
• $2667.38 cheque received April 2008

10When asked to provide details about the payments received, without the garnishee in place, Mr. Kirkey stated payments were received for the following dates and amounts

• December 11, 2007 $1500.00
• May 31, 2007 $2997.13
• June 30, 2007 $3104.87
• March 31, 2007 $3802.34

11He stated that these payments had no effect on the arrears. In response to a request for clarification he stated that there had been no attempts to pay arrears. Normal monthly payments are due on the 23rd of each month.

12Again, under questioning, Mr. Kirkey confirmed that six cheques had been received as part of the MOU. One cheque was NSF. The last cheque for arrears was received on December 11, 2007. When questioned, he confirmed that the balance owing, as of today is $42,418.11.

Licensee’s Evidence

13Mr. Allan stated he filed returns, as required, every month. He indicated that he did not have these records with him today. In the month of July 2007 he reached an agreement for repayment, with Mrs. Brenda Mantz, Collection Officer, from the Ontario Ministry of Revenue. He sent post-dated cheques for the arrears. Mr. Allan spoke with Mrs. Mantz in April 2008 about the scheduled hearing and he stated that she advised him to await the outcome of the hearing.

14Mr. Allan stated that his health has impacted his ability to work, but now he was back at work and planned to ensure that taxes were collected from the customer. As well he was reducing staff and making changes to reduce food costs. He stated that he would be eliminating four positions: two cooks and two waitresses. His diner seats 52 inside and has a patio in the summer. Many of the customers are employees of General Motors and the plant is directly across the street.

15Mr. Allan stated that all RST returns were sent by Purolator. He personally signed each cheque and was certain that a cheque was sent with every return. Mr. Allan acknowledged that he had two NSF cheques in 2008.

16When questioned, Mr. Allan indicated that he understood his obligation to hold the Retail Sales Tax money in trust until payment was remitted. When asked, he stated that the money was used in the business, for such things as paying staff.

17When asked about the MOU and his plans to pay down the debt, he indicated that this would occur through sales at the restaurant, but he had no specific written plan. He indicated that he was prepared to make payment for arrears within the next six months and understood that this would mean a payment of $7,000.00 per month plus the current RST. He indicated that he understood that the total monthly payment could be approximately $10,000.00.

18When asked about the arrears that occurred, he indicated that with poor health he had not been able to be present in the business and felt that staff may have “altered sales receipts” and there may have been “stealing” of funds. When asked, Mr. Allan indicated that he could not provide evidence of this.

19When questioned, Mr. Allan stated he knew he owed funds, but did not agree with the amount in arrears as stated by Mr. Kirkey. However, he did not have a figure for the amount he believed he owed.

Registrar’s Submissions

20Mr. Alakas stated under Section 6 of the LLA, the Registrar’s office was seeking to revoke the licence for Mozie On In Diner. The Licensee cannot be considered financially responsible when he is not there (on the Premises). He suspects that employees are stealing and seems to realize bookkeeping is a problem. Mr. Alakas stated that Mr. Allan should have taken action, but chose not to act. There is no evidence that stealing has occurred, no evidence that the Licensee has contacted anyone to work this out and has been avoiding his problems rather than dealing with them.

21The arrears continue to accumulate. The MOU was broken by the time a signed copy was received by the Ministry of Revenue. Six cheques were received for arrears, with one cheque being NSF. The arrears are continuing to accumulate. Presently there are four possible NSF cheques. Two are confirmed and there are a possible two more that occurred recently. The arrears are now greater than $42,000.00, with the Licensee making no effort to resolve the situation. There has been evidence that current filings do not include the required payments and therefore the arrears continue to grow.

22He indicated that the $42,000.00 could not be justified just because the Licensee was unable to be at work. Cutting positions would not make up the dollars owing and that there was no indication that the Licensee would be able to control stealing, if it was occurring.

23Mr. Alakas stated that RST funds are to be held in trust, but the Licensee admitted he used the funds for payroll and product. There was no evidence that he maintained separate accounts to preserve the payment and it seems he has used the money for his own purposes. He stated that the situation was regrettable, but asked, under the circumstances, that the licence be revoked.

Licensee’s Submissions

24Mr. Allan indicated he did not require time to prepare his final remarks and that he had nothing further to add.

Analysis/Reasons

25The Board has considered all the evidence very carefully and reviewed information sheets submitted as Exhibit # 1.

26It is truly regrettable that Mr. Allan has been coping with medical problems that have been keeping him from being in regular attendance at his place of business and that he now finds himself in a very difficult financial position.

27Although he has had a manager for four years, the problems relating to staff, food costs and bookkeeping practices seem to be factors affecting the present financial concerns.

28Even though Mr. Allan indicated that there may have been theft, no evidence was presented to address the suspicion that there may have been theft and the Licensee did not present any action taken to address this concern.

29As well, it appears that the issue of RST payment have been ongoing for some time, with evidence presented stating that the failure to file and remit payments has been ongoing since 2006.

30The evidence of the Registrar’s witness, Mr. Kirkey, was not presented in a concise manner nor in a chronological way and it took numerous questions to clarify the details of the information. However, with questioning and clarification, it is clear that the amount owing continues to escalate with the amount due at this time, as stated by Mr. Kirkey, being $42,418.11. Mr. Allan did not agree with this amount, but could not present any evidence to the contrary.

31Materials submitted as Exhibit # 1 suggest the amount of the liability is $31,028.49. Although there is a discrepancy between this number and the arrears of $42,418.11 as stated by Mr. Kirkey, the fact remains that the amount of money in arrears is significant and the evidence suggests that this amount is continuing to grow. The parties did not dispute this fact and Mr. Allan admitted that he has been unable to meet the terms of payment as outlined in the MOU.

32From the evidence, although Mr. Allan had delayed signing and returning the document, all parties stated that the MOU conditions were understood and agreed to on or about June 8, 2007. There was no dispute between parties that by the time the agreement was signed and returned on August 8, 2007, Mr. Allan was already in violation of the terms of the agreement. As well, through the evidence it is apparent that additional payments for current RST filing did not include the required payment for arrears and / or the current month’s amount due. This has been contributing to the continued escalation in the amount past due.

33Mr. Allan did state that he had spoken to a Mrs. Brenda Mantz, Collection Officer for the Ministry of Revenue, and was told to wait for the outcome of the hearing. For this hearing he did not come prepared to provide information as evidence in support of his licence, nor did he present a solid plan to assure the Board of his intent and ability to pay the arrears and current monthly RST returns.

34Mr. Allan stated that he did not have a formal business plan for payment, but that he would be the cook and was reducing his staff. This Board is not convinced that this reduction in staff, with adjustment in food purchasing would ensure a stable or growing income from his business that seats 52 patrons. The amount of his monthly payments for arrears plus the monthly RST is estimated to be $10,000.00 per month. Mr. Allan indicated that he understood that this would be the amount of his payment to the Ministry of Revenue and did not dispute this estimate. As well, the Board notes, that this does not include the additional monthly expenses for other business expenses that would be incurred in the running of a restaurant.

35While the Board is sympathetic to Mr. Allan and his past & present situation, it is a concern that he did not come to the hearing prepared to present documentation to confirm his efforts to repay the arrears, nor come with a viable business plan for payment of his debt and current expenses for the business. He did not indicate steps he might take to ensure the control and remittance of retail sales taxes. With these factors, as well as the breach of the last MOU, and the mounting arrears, the Board is unable to support a continuance of the licence.

Conclusion

36Therefore, for the reasons given, the Board ORDERS that liquor licence number 805555 issued to Mozie On In Diner Inc., (The), operating as MOZIE ON IN DINER, 60 Glendale Avenue, Niagara-on-the-Lake, Ontario, L0S 1J0, be REVOKED effective immediately.

DATED AT TORONTO THIS 29th DAY OF August , 2008