Registrar, Alcohol and Gaming Commission of Ontario v. 535702 Ontario Inc. O/A Albert’s Hotel, 2009 CanLII 55556

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-

535702 Ontario Inc. O/A Albert’s Hotel

Licensee

DECISION

Panel: Kirsti Hunt, Vice-Chair, AGCO Allan Higdon, Board Member

Decision Date: August 6, 2009

Hearing Location: Timmins, 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 ) Richard Kulis, Representative

535702 Ontario Inc., Licensee ) Vic Theodore Larocque, on ) behalf of the corporate licensee

Allegations

1A hearing into Notice of Proposal number 17107 dated March 6, 2009 to revoke a liquor licence and an Order dated March 6, 2009 to immediately suspend liquor licence number 10188 issued to 535702 Ontario Inc. operating as Albert’s Hotel, 122 Mountjoy Street South, Timmins, Ontario, P4N 1T1 on the basis of alleged violations under clause 6(2)(d) of the Liquor Licence Act (“LLA”) and subsection 45(2) of Ontario Regulation 719/90 (“O.Reg”) under the LLA, was held on March 30 and May 7, 2009 in the City of Timmins.

Decision

2After considering all the evidence and submissions the Board FINDS the Licensee violated subsection 45(2) of the O.Reg. The Board DISMISSES the allegations of a violation of clause 6(2)(d) of the LLA. Reasons follow.

Preliminary Matters

3Mr. Kenneth Alexander appeared as representative for the Licensee on day one of the hearing. On day two, Mr. Vic Theodore Larocque, principal of the corporate licensee, appeared on its behalf and waived the right to a legal representative.

4The Board ORDERED the exclusion of witnesses on consent of the parties.

Registrar’s Evidence

5Det. Sgt. Darren Dinel of the Timmins Police Service testified that on February 27, 2009 three search warrants were issued, one for the residence of G.C., one for the residence of R.B. and one for Albert’s Hotel for room 3 and the room west of that room.

6He began observations of Albert’s Hotel at 12:50 p.m. At 1:25 p.m. he observed R.B. and O.C. exit Albert’s Hotel, move their vehicle from the hotel parking lot to a position across the street from the hotel and then re-enter the hotel. He called Sgt. Starcevic advising him that the police could attend the three addresses in question and execute the search warrants.

7Det. Dinel walked up to O.C. who was exiting Albert’s Hotel and told him to go back inside. Sgt. Starcevic arrived with other police officers and entered Albert’s Hotel.

8Vic Larocque, the owner, was working behind the bar and there were about 8 patrons inside. Mr. Larocque was advised of the search warrant and he contacted legal counsel.

9With the use of the floor plan of Albert’s Hotel (Exhibit #1) Sgt. Starcevic indicated that he and other officers entered room 3 and found R.B. and two patrons in the room. R.B. was searched and 10 percocet tablets, just over $1200 in Canadian currency and a cell phone were found on his person and seized. They arrested R.B. and provided him with a copy of the search warrant and advised of the search warrant being conducted at his residence. He was then taken to the police station and kept in custody pending the outcome of the police investigation.

10The following were seized from room 1:

• 2 bags of percocet tablets containing 160 tablets
• 71.5 g cocaine packaged in 0.5 g bags totalling about 140 of these bags
• 3 digital scales
• Large quantity of dime bags and packaging materials
• 194.1 g dextrose commonly used as a cutting agent for cocaine
• A debt list
• $300 in Canadian currency
• A rent receipt for room 1 indicating that R.B. had rented that room.

11At R.B.’s residence police officers found the following:

• 6 percocet tablets
• 6.1 g cannabis marijuana
• 1.6 g cannabis resin
• A large quantity of dime bags
• $4050 in Canadian currency
• A switch blade knife

12R.B. was charged with possession for the purpose of trafficking cocaine, possession for the purpose of trafficking oxycontin also known as percocet, possession of proceeds of crime, possession for the purpose of trafficking marijuana, simple possession of cannabis resin and possession of a prohibited weapon.

13Det. Dinel searched the bar area and found no drugs there. Sgt. Starcevic found an empty magnetic box attached to a radiator in the premises. Cst. Halt found used dime bags of cocaine at the bottom of a garbage can in the women’s washroom.

14T.C., the wife of G.C., was at Albert’s Hotel at the time the search warrant was being executed. She contacted her husband prior to police executing a search warrant at the Cote residence. At the residence, police found 5 percocet tablets and 7 g of cannabis resin. G.C. was charged with possession of oxycontin and cannabis resin. Other items of interest were sophisticated surveillance cameras at G.C.’s residence and a radio frequency detector.

15Det. Dinel indicated that he is familiar with G.C. and R.B. who both have reputations as drug traffickers. G.C. has been involved in drug trafficking for some time based on confidential information, on investigations in Timmins and other agencies that have come to Timmins to investigate.

16R.B. had been charged with trafficking at Albert’s Hotel in the past. On March 26, 2004 a search regarding an unlicensed firearm was executed in R.B.’s room number 16 at Albert’s Hotel. No fire arm was found. Police did find the following:

• 13 g cocaine
• 31 Demerol tablets
• 2 g psilocybin which is magic mushroom
• $1155 in Canadian currency
• several debt lists
• a scale
• packaging materials
• 158 g cutting agent,
• A magnetic key holder box

17R.B. was charged with possession for the purpose of trafficking and 2 counts of possession of an illegal substance.

18Police records show the following history at Albert’s Hotel.

19Cst. Romualdi of the Timmins Police Service received confidential information that G.G. was selling marijuana in the establishment. On January 17, 2001, as part of a Controlled Drugs and Substances Act (CDSA) investigation, Cst. Romualdi found G.G. at a table in the licensed establishment. He seized 28 g cannabis marijuana, ½ percocet tablet, a pager and $293 in cash from G.G. G.G. was residing in room 9 of Albert’s Hotel. In his room police located trace amounts of cannabis marijuana and 15 g cannabis resin. He was arrested and charged with 2 counts of possession for the purpose of trafficking and 2 counts of possession of a substance.

20On January 23, 2001, as part of a liquor and CDSA investigation, Cst. Romualdi located C.C. in the establishment. C.C. was found with 7 folds of cocaine, a package with 3.5 g cocaine, a pager, and $131 in cash. He was arrested and charged with possession for the purpose of trafficking.

21Later in the day of January 23, 2001, Cst. Duval of the Ontario Provincial Police (OPP) went to Albert’s Hotel as a result of confidential information received that D.T. was trafficking cocaine in the establishment. D.T. was arrested in the establishment when he was found to have 17 packages of cocaine each containing 0.5 g each and $110 in cash on him. He was charged with possession for the purpose of trafficking cocaine.

22On February 23, 2001, Cst. Romualdi attended at Albert’s Hotel as a result of confidential information that P.C. was trafficking cannabis marijuana there. P.C. was located in the premises and arrested. He had 12.4 g cannabis marijuana. He was not charged with possession.

23On January 3, 2003 Sgt. Starcevic went to Albert’s Hotel as a result of a disturbance call. Several liquor licence charges were laid but no drugs were found on that date.

24On September 2, 2004 Cst. Martineau of the OPP found drugs outside Albert’s Hotel.

25On November 20, 2004 during a routine liquor inspection, Cst. Lilco of the Timmins Police Service observed B.G. consuming alcohol in the premises. A CPIC query showed that he was on a court ordered condition not to consume beverage alcohol and was arrested for breach of condition. He had on him 34 percocet tablets and was charged with simple possession.

26On January 15, 2005, Cst. Starcevic attended at Albert’s Hotel with members of the Alcohol and Gaming Commission of Ontario (AGCO) for a liquor compliance check. He located a magnetic holder or key box inside the establishment. The box contained 4 bags of cocaine containing 0.5 g each and one morphine tablet. No charges were laid regarding that seizure.

27On August 19, 2005 an investigation of D.P. resulted in a search warrant being executed in room 21 of Albert’s Hotel and D.P.’s residence. No drugs were found in the room. In his residence, 0.3 g of cocaine was located. D.P. was found in Albert’s Hotel and arrested.

28There was no discussion with the owner regarding the activity that was occurring,

29On cross-examination, Det. Dinel agreed that there had been no CDSA investigation at Albert’s Hotel between August 19, 2005 and February 27, 2009.

30He agreed that on February 27, 2009 he looked in the general area where the magnetic box was found and saw nothing before Sgt. Starcevic found the box. He agreed that the box was not readily visible.

31It is not a practice to tell licensees that a person has been arrested for drug trafficking in their establishment. Police are in the establishments in uniform but not all the people arrested are charged. The arrests do not end up in the newspaper on all occasions.

32The officer did not know what the results were of the charges for R.B. or C.C. He did not know if C.C. was known to Mr. Larocque. G.C. was not arrested because he was not at his residence or in the establishment.

33Mr. Larocque was courteous. He gave access to his safe after contacting his lawyer. They found nothing in the safe. Police asked for the surveillance video but Mr. Larocque could not provide it at the time because he was not familiar with the operation of the equipment. A video tape was later mailed to police with some surveillance footage for the previous two months.

34Room 3 had a number on it and Mr. Larocque indicated that the other room was number 1. There was a connecting door between the two rooms. The door to room 1 was not forced open. The adjoining door from room 3 was forced to gain entry to room 1. The door of room 3 was not locked. The doors were of steel. He could not recall a sign saying “Contribute to non-smoking fund” in room 3 but did recall a bottle with bristol board on it with writing on it. There was not a bed in room 3 but there was a TV set. Room number 1 had a couch and a TV set.

35The officer was not involved in the earlier investigation of a break-in into room 3.

36Inspector Norm Pigeon of the AGCO gave a history of activity at Albert’s Hotel. On April 24, 2004 the AGCO worked with the Timmins Police Service in a joint forces compliance initiative in Timmins. Two AGCO inspectors went to Albert’s Hotel in an undercover capacity. They reported to Inspector Pigeon that three offences had been observed. Inspector Blais ordered a Labatt’s and received a ballot for a bar fridge. The other Inspector did not get a ballot and asked about it and was told by the bartender that he had to order a Labatt’s to get a ballot.

37On May 13, 2004, Inspector Pigeon went to the establishment and spoke to L.R. who said that she was the manager. He advised her of the infractions observed on April 24, 2004. He spoke to Mr. Larocque, the owner, about the CDSA search warrant executed on March 26, 2004 in room 16 rented by R.B. which resulted in charges of possession for the purpose of trafficking. Mr. Larocque said that R.B. was employed as a handyman by him and he often ran errands.

38On November 20, 2004, Inspector Pigeon went to Albert’s Hotel with Cst. Robert Barrette and Sgt. Starcevic to conduct a liquor compliance check. On entering he observed a patron in possession of and consuming bottled beer while standing at the main service bar. Both police officers knew him as B.G. and that he was known to be involved in the sale of illegal drugs. Due to B.G.’s level of intoxication, he was arrested for public intoxication. He was searched and 34 percocet pills were found on his person. He was also charged with possession of a controlled schedule 1 substance and failure to comply with an undertaking because he was under condition not to attend a licensed establishment or consume alcohol. He was convicted on both charges.

39On January 15, 2005, Inspector Pigeon went to the establishment with Sgt. Starcevic on a routine liquor compliance inspection. Sgt. Starcevic located a magnetic key holder box, fastened to a cast iron radiator in the establishment, which had four half-gram bags of cocaine and a morphine tablet.

40On January 26, 2005, Inspector Pigeon met with Vic Larocque and reviewed with him the incidents of November 20, 2004, January 15, 2005 and the incident with R.B. on March 26, 2004. He advised Mr. Larocque that R.B. was on a court ordered condition not to be in Albert’s Hotel for any reason. Mr. Larocque advised him that he had fired R.B. the day that he learned about the charges against him. Mr. Larocque denied that drugs were being sold in the bar. The Inspector cautioned him about the seriousness of the offence of permitting the use, sale and distribution of drugs in a licensed establishment.

41On October 17, 2006, Inspector Pigeon went to the establishment after receiving an anonymous complaint that illegal gambling was going on once again in the bar. On entering, he observed a large poster in the front window and a second poster in the licensed area advertising Texas hold-em games at 9:00 p.m. every night. A female waitress, who was not known to him, asked him if he was there for the poker game and said that due to poor weather outside the game probably would be cancelled.

42On February 27, 2009, he went to Albert’s Hotel at 1:29 p.m. with Timmins police to execute the warrant.

43He observed around 11 patrons in the establishment as well as the licence holder Vic Larocque and his wife. Officers announced that a search warrant was being executed. Two officers observed the people in the premises while Sgt. Starcevic and Det. Dinel entered room 3 which is located immediately adjoining the licensed premises.

44Everyone in the licensed premises was searched and released except the wife of R.B. and the girlfriend of G.C. Both were advised that police were conducting CDSA search warrants at their residences at that time.

45The Inspector and Mr. Larocque accompanied Sgt. Starcevic as he searched the walk-in cooler and the liquor storage room. Sgt. Starcevic located a black magnetic box fastened to a heating radiator near the pay phone located in the south east corner to the licensed area. It had a residue believed to be cocaine.

46In the women’s washroom, police found a number of empty ‘dime bags’ (a one inch by one inch Ziploc bag commonly used in the sale of drugs).

47Det. Dinel and Sgt. Starcevic advised him that the search of room 3 now included room 1 through an adjoining door. There they located and seized:

• around 5 oz. cocaine already packaged into approximately 150 dime bags ready for sale
• an assortment of pills in room 1 and on R.B. who was located in the room
• scales, packaging material and other drug related paraphernalia

48In the office, police found a receipt for rooms 1 and 3 with the name of R.B. indicating that the rent had been paid.

49The Inspector went to rooms 3 and 1. In room 3, referred to as the smoking room by G.C. and the Licensee, he observed a large sign asking people to donate to the smoking room. There were no beds in either room and he did not see any personal items.

50Mr. Larocque asked him if the results of the search warrant would have an effect on his licence. The Inspector told him that he would have to review all the police information before any determination could be made and advised Mr. Larocque that he would contact him as soon as he could. Mr. Larocque said that he would be out of the country for the next three weeks.

51On March 6, 2009, the Inspector got notification from Registrar’s counsel that an interim suspension was going to take effect immediately. He notified Timmins police of the suspension order and Sgt. Starcevic, Cst. Rantala and Cst. Lamarche were assigned to assist him with the execution of the order. At 5:30 p.m. they entered Albert’s Hotel and observed around 10 patrons in the establishment. Two patrons, O.C. and J.T. were identified as two individuals known to Timmins police as being involved in drug sales.

52The Inspector identified himself to the waitress on duty, D.R.H., and explained the purpose of the visit. She tried to contact the bar manager, Melissa Douglas who could not be reached. The waitress advised him that she was working until 7:00 p.m. and that N.L., who was in the bar, was the waitress starting at 7:00 p.m. She advised that Mr. Larocque was in Peru and she did not have a phone number for him.

53The patrons were permitted to finish their drinks and they left without incident. Sgt. Starcevic advised him that he had searched O.C. and found him in possession of one marijuana cigarette. O.C. was released. O.C. was also in the licensed establishment on February 27, 2009 when the search warrant was executed. The Inspector had also seen him several times over the years to be in the establishment. It is commonly known by Timmins police and the community that O.C. is involved in illegal drug sales.

54Staff locked the doors, cleared up and counted the cash in the till. The Inspector exited the establishment at 6:00 p.m.

55After the execution of the search warrant and the delivery of the Interim Suspension Order, he advised Timmins police that N.L. was the girlfriend of O.C.

56On cross-examination, Inspector Pigeon did not agree that he told Mr. Larocque that he would return to tell him about any further action resulting from the search warrant before he left on holidays. The Inspector believed Mr. Larocque was leaving that night or the next morning. He agreed that Mr. Larocque may have indicated that he would cancel his holiday if anything was to happen as a result of the search warrant. He agreed that Mr. Larocque was cooperative.

57The Inspector was in the establishment six times between 2006 and 2009 and he may also have spoken to Mr. Larocque over the phone during that time.

58On February 27, 2009, the Inspector found nothing related to drugs in the licensed premises, storage room, beer cooler or office. The police photos show that there was a dime bag in the sink, some in the garbage can and one on the floor in the women’s washroom which was searched by a female officer. He could not recall if Det. Dinel had searched the radiator beside the phone. He did walk by it with 3 police officers.

59The complaint on October 17, 2006 about illegal gambling happening again related to a past incident in 1998 when the corporate licensee was convicted of keeping a common gaming house as a result of three video gaming machines that were seized from the premises. Charges against Mr. Larocque in that matter were withdrawn.

60In response to questioning by the Board regarding the evidence of how drug dealing appeared to be happening in the premises, the Inspector indicated that he met with Mr. Larocque to make sure that he understood what appeared to be happening in the establishment. He explained what he had seen, the undesirables involved and how it had a detrimental effect on his liquor licence.

61Sgt. David Starcevic is in charge of the Drug Enforcement Section of the Timmins Police Service. He was at Albert’s Hotel on February 27, 2009. He was the exhibits officer and took photos during the execution of the search warrant. With the use of these photos, Exhibit #5, Det. Starcevic described rooms 3 and 1, gave his observations and detailed the items found and where they were found. When he entered room 3, there were two people at a table having a cigarette. One of these individuals was R.B. He was arrested after 10 percocet pills were found in his pocket along with $1200 in Canadian currency. R.B. did not say he had a prescription for the pills.

62A reinforced door leading from room 3 to room 1 was forced open. There was no indication that anyone was living in the room. In a closet, there were some tools and a cooler bag. In the bag, there was a watch box containing 7.6 grams of cocaine; a clear baggy with number 7 on it containing a piece of paper with 800 on it - that was the price of $800 in the officer’s opinion; baggies of cocaine, some containing 0.5 grams and some with 1.75 grams. Inside the cooler bag was also a smaller red Budweiser cooler bag containing plastic baggies and a cookie tin containing different sized bags. Four bags were seized with a total of 64.1 grams of cocaine. Also seized was 194.1 grams of cutting agent.

63In the dresser drawer, a $300 bundle of money was found. He explained that the money was bundled the way that traffickers bundle money that they owe suppliers.

64Three seizures were made from room 1 which are not shown on Exhibit #5. In one drawer, 100 percocet pills were found. In another drawer, there was a bag with 60 percacet pills and blue and red bags which contained 3 digital scales and a grocery bag with baggies.

65The officer also photographed the empty dime bags found by another officer in the women’s washroom.

66Mr. Larocque provided a rent receipt for the rooms in the name of R.B. with “paid” hand written on the top of it.

67Based on information that people at Albert’s Hotel were keeping drugs in a magnetic box hidden in a radiator, the officer found such a box in January 2005. The box contained four ½-gram bags of cocaine. Based on that info, on this date he located a magnetic box in the south east corner of the bar by the pay phone. There was dust on it and nothing but a trace amount of cocaine inside. He could not say how long the box had been there.

68He also had experience with R.B. in 2004 when a search warrant was executed in another room at Albert’s Hotel. He assisted in the investigation on February 27, 2009 and believed, based on the drugs, money and drug paraphernalia seized, that R.B. was selling illicit drugs from that location. Based on the way that room 1 was set up, drug sales had been going on for some time and the operation had not just been set up. He did not know how long R.B. had been renting that room.

69On cross-examination, Sgt. Starcevic indicated that he believed that R.B. has made an appearance in court but did not know if the charges against him have been dealt with yet.

70He agreed that no drugs were found in the bar area. He did not think that any drugs were found on anyone who was in the bar.

71He looked at all the radiators in the bar area and found the magnetic box under the radiator by the phone. Mr. Larocque saw him find the box. He found offensive the suggestion that he planted the box under the radiator. He did not know if Det. Dinel searched the area where the box was found. The box was so dusty that it had been there for a long time.

72He was not in charge on March 6, 2009 when O.C. was searched and found to be in possession of a marijuana cigarette. He just seized the cigarette.

73He has been in the drug squad for 6 years and in charge of the squad for 2 months. He agreed that police made no drug seizures at Albert’s Hotel in 2006, 2007, and 2008 but added that persons were arrested there in that time but he did not have specific statistics.

74Based on his years of experience on the drug squad, it looked like a cocaine distribution operation was being conducted from the two rooms in question.

75Cst. Robert Barette of the Timmins Police Service was part of the drug enforcement unit which participated in Project Calvette with officers from the OPP, Royal Canadian Mounted Police (RCMP) and agencies across Canada. Officers kept surveillance of several liquor establishments in the area. One person of interest was G.C. who frequented Albert’s Hotel.

76Cst. Martin of the OPP received confidential information from a proven and reliable source that D.P. was going to Albert’s Hotel to distribute a controlled substance which was on his person. On September 3, 2004, Cst. Martin commenced surveillance of D.P. D.P. went to his apartment, retrieved a yellow grocery bag from behind the garbage cans and then left in a cab. At 2:33 p.m. he was arrested as he exited the cab across from Albert’s Hotel. D.P. had a scale, a spoon with traces of cocaine, a cardboard piece of a cigarette package used to scoop and cut cocaine, miscellaneous packaging materials of different styles and different amounts, 34 oxycontin pills and 2 grams of cocaine. D.P. was later convicted of two counts of trafficking cocaine.

77As part of Project Calvette, multiple individuals were arrested on September 8, 2004 and all were convicted of conspiracy, traffic cocaine, possession of narcotics and possession of a fire arm. A warrant was executed at G.C.’s residence. He was not charged.

78On November 20, 2004, Cst. Barette along with Inspector Pigeon and Cst. Starcevic were doing compliance checks of licensed establishments. After entering Albert’s Hotel, Sgt. Starcevic spoke to B.G. who was in the bar and who had just ordered a beer. He was under condition not to be drinking and was arrested. Cst Barette observed Cst. Starcevic and Cst. Lilko placed B.G. in a police cruiser. He tried to discard 34 blue percocet pills from his person. He was charged with possession of a controlled substance.

79The officer described the incident of February 26, 2004 regarding R.B. and corroborated the evidence given by Det. Dinel regarding the drugs found and the charges laid.

80On cross-examination, Cst. Barette agreed that the incidents he described happened prior to 2006. He agreed that R.B. was not in the bar area on March 26, 2004. Police entered the front lobby and proceeded upstairs to his room.

Licensee’s Evidence

81Melissa Tara Douglas testified that she has worked at Albert’s Hotel since July 2005 but is not working now because she had a baby 2 ½ months ago. She is the manager and collects rents, is in charge of the inventory, makes sure everything in under control, does the bottles, beer orders and schedules.

82She keeps control in the bar because she is responsible for what happens there. If someone is acting inappropriately, she has the authority to get them out. They do not over serve or serve under-aged people. She does not favour friends or friends of the owner. If she sees someone sell a joint she gets them out. There is to be no drug activity in the bar. She has never had a problem with that. A couple of times she had to kick someone out. Once a person was sniffing a drug and was barred from the premises for 6 months. On another occasion, a person was crushing an oxycontin pill on a table. They are supported by management in any decision that they make be it to bar someone for 30 days or forever.

83There is a report book (Exhibit #2) behind the bar and the instructions are that any incident is to be recorded along with the date and time and how long a person is barred. All waitresses are encouraged to report in the book. Not all of them use the book but she always does. The book was present when the search warrant was executed. If someone is suspected of drug behaviour, what is done about it depends on what is found. Drug activity is not tolerated.

84They do not follow patrons into the washroom. A couple of times someone has said that a person was going to “poke in the washroom” (inject themselves) and she has gone to the washroom and gotten them out. She has banned a male and a female for that activity.

85In the last few months, security cameras have been installed.

86She has rarely seen the AGCO Inspector or police. She had to call police on one occasion because people were hanging out in the lobby. People come in from the street to sleep inside. There is no record of that in the report book. She just got them out.

87On cross-examination, Ms Douglas explained that besides herself, the other people working are Vic and his wife, D.R.H. and N.L. N.L. has been fired.

88She is the sole manager and works 7:00 p.m. to 3:00 a.m. on Wednesday nights and from 11:00 a.m. to 7:00 p.m. on Thursday, Friday, Saturday and Sunday.

89It is busier during the day and there are 6 to 12 people in the premises steadily. At night it is quiet with 4 to 5 people. At odd times it is busier but not often. She is the manager for the rooms and can rent them out but basically Mr. Larocque takes care of them.

90Exhibit #2 is the only report book. She agreed that it starts on April 20, 1999 and notations go only half way through the book. Some pages are ripped out because N.L. needed some paper. She tells the waitresses to write incidents in the book but they do not always listen to her. She agreed that there were no entries from March 2000 to July 2006. She explained that she started writing in the book when she started as manager on July 6, 2006. D.R.H. before her was not good at recording in the book.

91The notation on May 3, 2008 is about the male who was crushing the percocet tablet on the table. D.R.H. recorded the October 14, 2008 incident with S. F. who is still trying to get into the bar. When she or staff write into the book, she tells Mr. Larocque about it or leaves him a note. She agreed that one reason for the book is so that Mr. Larocque is kept aware of what is happening when he is not there. They also record who is not allowed in the premises. A new waitress can read the book and know who is barred.

92Mr. Larocque is present all the time from 11:00 a.m. until last call at 2:00 a.m. He and his wife work together. The waitresses work alone. She is the manager when she is working. All staff have their Smart Serve.

93She did not think there is a policy about employment of a person who has been arrested or charged with possession of a controlled drug or a drug offence. She was not asked to get a police check. She did not think that they could find a waitress if they needed to get a check.

94She denied that she had been charged as a result of a May 4, 2005 incident since it had nothing to do with her. She explained that she had moved in with the wrong person. She made a bad choice and she has not had a roommate since.

95If she knows that someone is using the washroom for drug activity, she kicks them out. When asked about a policy regarding washrooms, Ms Douglas indicated that Mr. Larocque tells them to check washrooms. If she sees three guys go to the washroom, she knocks on the door and asks what is going on because she cannot go into the male washroom. That has happened a few times. The female washroom is easier for her to check. She even checks the upstairs washroom.

96There are no written policies. When a person is hired, they are told what Mr. Larocque wants and what he does not want. She, D.R.H. and N.L. know what to do and what not to do to control the bar. Maybe twice a year 4 or 5 of the staff go out for lunch and they call it a staff meeting because they sit there and talk.

97She is familiar with pretty well all the patrons. They are mostly regulars. R.B. is a regular. G.C. comes in a few times a day. T.C. in not really a regular. She is not in every day.

98The video cameras were installed in December 2008 for security No one monitors the cameras. If something happens, staff write down the date and time and Mr. Larocque can check the tapes. If nothing happens, he does not look at the tape. There are 11 cameras that record 24 hours a day. There is a monitor in the office. She is not aware of any drug activity caught on tape.

99On redirect, Ms Douglas added that when she is working, Mr. Larocque takes off from Thursday through the weekend. He lives next door to the hotel. If she needs him, she can call him or write to him on the Internet. She has a cell phone paid for by Mr. Larocque through the bar.

100There is no food prepared in a kitchen. The waitresses mostly serve sandwiches so there is nothing to make.

101Viateur (Vic) Theodore Larocque testified that he has operated Albert’s Hotel since February 3, 1983. He did not meet the AGCO Inspector frequently in 2006, 2007 and 2008. Before February 27, 2009, the Inspector was in once before when a waitress was charged for over-serving a patron. He congratulated the Inspector for charging the right person, for the waitresses are well aware that they are not to over-serve.

102The raid on the hotel took place February 27, 2009. He had made arrangements to go to Peru for three weeks for a holiday. He told Inspector Pigeon about his plans and told him that he was willing to cancel the holiday if anything was to happen as a result of the raid. He said that nothing would happen so he left for Peru. While he was in Peru, he found out that the hotel was closed and he had to buy new tickets at a cost of $4000 to come back early.

103Mr. Larocque stated that he has nothing to do with drug activity. He has been a non-drinker for 7 years and does not use drugs. He despises drugs and has told police that they can come into the establishment at any time to investigate.

104After speaking with Mr. Kulis, Deputy Director (Legal Services Branch, AGCO), he sent out trespass notices (Exhibit #3) to G.C. and his wife T.C., R.B. and his wife K.M., O.C. and his wife N.L.

105He has also posted three different signs (Exhibit #4) in the establishment stating that any illegal activity will not be tolerated, no illegal drugs are allowed in the establishment and that the establishment is under surveillance.

106He contacted the Health Unit to see if the washroom could be locked. He has not heard back from them.

107He has 11 video cameras for surveillance: 4 in the bar; 1 on Second Avenue facing the entrance to the bar; 1 by his house facing the fire escape from the rooms at the back of the building; 1 in the lobby; 1 in the upstairs lobby going into the rooms; 1 in the hallway to the rooms; 1 in the office; 1 in the hallway of the basement.

108When police came in, he told them they were welcome to view the tapes and they went in and broke the DVR. He could not access the system so he had Century Security make a tape. He got a new DVR and the system records date and time so it is possible to check a specific incident. The cameras are on a motion sensor and they have storage capability for at least a month.

109He has management and staff luncheon meetings at Boston Pizza. He has told staff that if anything happens, they are to record it. The book (Exhibit #2) has been there for a long time and is always on top of the bar. He has another report book at home. He tells staff that there is to be no drug activity and if people are difficult, they are to be barred. He is the only person who can unbar a patron. Mr. Larocque recalled that R.B. had been arrested in the past but he could not recall the outcome of that. He could not remember if he had barred R.B. after that.

110Before he left for holidays, Melissa had a list of occupants living at Albert’s Hotel and who had paid and who had not. R.B. was at the establishment to help if he went away on holidays. He was the handyman who would fix anything that broke down, changed door handles etc.

111Nothing has changed in room 3 since the police were in. He only changed the lock. The rest of the room is as it was. He explained that because of the smoking ban in Timmins, people would go to this room to smoke. The room was paid for by R.B. Originally C.W. paid for the room. He found out about the room because Melissa told him that he did not rent to R.B. He told her to put his name on the occupant list because R.B. gave him the money for it.

112Mr. Larocque indicated that he works the day shift from 8:30 a.m. to 7:30 p.m. but is always ready to go back if needed because he lives 4 to 6 feet from the hotel. He had worked 15 straight shifts before he left for his holiday. Considering the number of patrons and the volume of business, one person working at a time is sufficient. Business is slower than what it used to be in the past. If the waitresses need backup, Melissa has a cell phone to call him if he is in town. If he is out of town, they can call another waitress.

113He was surprised when R.B. was first charged with dealing drugs from his room. He did not know that R.B. was again involved with drugs. He is 67 years old and he thought that R.B. would have changed a little since the first occasion.

114He did not know about the magnetic key box in the radiator. When he saw the picture, he did not believe how big it was. It was not located where the officer took the picture of it. Det. Dinel looked at the radiator and he would have seen it.

115He is not aware of anyone in the bar who was arrested. He asked police to let them know if they did not want someone to be in the bar. That would make his job easier. He told police that he would accept their direction to prevent drug activity.

116On cross-examination, Mr. Larocque stated that when R.B. was arrested in 2004, he dismissed him. He agreed that he let R.B. back to the Albert’s Hotel to work as a handyman but explained that he never thought R.B. was back to selling drugs. He does not do drugs and does not think like dealers but will have to learn to think that way. He will bar the people on the list of people involved with drugs. He will tell his employees that no drug dealing will be allowed in the bar. If they see dealing, they are not to let it happen. In the 15 days straight that he worked and while R.B. was in the establishment, he never saw any drug activity in the bar.

117When asked if he had had no curiosity about R.B. doing any subsequent drug activity, Mr. Larocque replied that on January 21, 2009 at 3:30 a.m. he got a call at home about a break-in at the hotel in room 3. Police were there and they said someone got in through a window. They were there for 2 hours in room 1 and 3 investigating and they saw no drugs there. After that day, police came back looking for R.B. He told R.B. that police were looking for him and he went back to the room with the police.

118His employees are D.E., N.L. whom he dismissed, himself and his wife.

119It is a rule that everyone write incidents in the report book. No one, including his own son, is not to break any rule. He agreed that they do not always write in the book. When asked why there were no notations between 2001 and 2005 including the arrest of R.B., Mr. Larocque stated that there are pages missing but he did not know why.

Submissions

120Mr. Kulis submitted for the Registrar that Albert’s Hotel is a place where people are involved with drug trafficking. It is not alleged that Mr. Larocque is involved in that. However, for quite a few years, people involved in drug trafficking have frequented and dealt drugs there. They have used Albert’s Hotel as a distribution point for illegal drugs such as cocaine, oxycontin and percocets. Over the years, the names G.C., R.B. and O.C. became familiar because of the repetitive nature of their activities at Albert’s Hotel.

121The evidence of Inspector Pigeon shows that his concern about drug activity at Albert’s Hotel was brought to the attention of the licence holder several years before the February 27, 2009 incident. The Inspector had a discussion with him regarding the May 13, 2004 incident involving R.B., the November 20, 2004 incident involving B.G. and the January 15, 2005 incident regarding the magnetic box. He drew the Licensee’s attention to the activities and advised him of the problems that could arise if the activities continued. At that point, if not earlier, the Licensee would have had specific, clear knowledge of the AGCO’s and police concerns about drug activity or patrons using, holding or distributing drugs while at Albert’s Hotel.

122There is no evidence that there was drug activity just prior to February 27, 2009 but that does not negate the Inspector’s concerns. There were several incidents prior to the warning of the Inspector and the people involved were identified. It is the responsibility of the Licensee under the LLA to prevent illicit drug activity occurring in the premises. The knowledge imparted by Inspector Pigeon raises the bar for the Licensee because of the knowledge he had.

123The activities of R.B. were blatant and open. The amount of materials found on him and in the rooms he occupied indicate that rooms 1 and 3 were drug distribution areas.

124R.B. was specifically identified by Inspector Pigeon in 2005 as a person of concern because he was involved in drug activity. R.B. should never have been allowed in the premises after that. Despite that knowledge, the Licensee rented the rooms to R.B. and we do not know what he did to ensure that R.B.’s past activities did not recur. He could have checked with the Inspector or the police to find out if they had a concern about R.B. being back in the premises since his liquor licence was on the line as well as his livelihood and that of his employees. Precautions taken by the Licensee were non-existent and almost an invitation to come in and sell drugs again. From the description of the rooms, they were not where R.B. lived but were a place to do business. It was not concealed, but an open area, a smoking room, which was open to everyone.

125Drugs were not done in the licensed area but the evidence of the empty dime bags in women’s washroom show that it was done in the washroom. G.C., O.C. and R.B. were comfortable operating in Albert’s Hotel. However, a licensed premises should be an extremely uncomfortable place to deal drugs. It should be made uncomfortable by the Licensee who is in direct control taking precautions, implementing and executing policies and making clear to everyone using and dealing that drugs are not to be tolerated in the establishment.

126There have been some measures taken prior to this last incident with video equipment being installed. However, that did not deter R.B. from setting up shop.

127Based on the February 27, 2009 incident, there is a violation of subsection 45(2) of the O.Reg for permitting the distribution of drugs in the premise and a violation of clause 6(2)(d) of the LLA for past conduct based on the history and the updated incident of February 27^th and the follow up incident in March with O.C. The Registrar is seeking a revocation of the Licence.

128Mr. Larocque submitted for the corporate licensee that he has already paid dearly for the act of a person over whom he has no control. He has had to pay for a lawyer, his return plane tickets and the bar has already been closed for 26 days. His business is very slow and he has very little sales in April compared to those in March.

129The evidence is clear that at no point was anyone caught dealing drugs in the licensed area of the bar.

130B.G., D.P., R.B. and O.C. all have been barred. D.P. and B.G. were barred before February 27^th. He also barred G.C.’s wife T.C., and R.B.’s girlfriend K.M. He dismissed N.L. who was living with O.C. who was never arrested in the bar for drug dealing.

131There is no evidence that he was aware of drug dealing in the licensed area of the bar. In 13 years no one was arrested in the bar which is a good record. Most of the people arrested were in their room where he has no control. Police came in for a gun infraction and did not find any guns.

132The smoking room was open and he himself was in rooms 1 and 3 on February 21, 2009 when there was a break-in and no drugs were found there. A few days later, police entered the same room with R.B. and no drugs were found. He had no knowledge that drug dealing was happening.

133He is going through considerable hardship and is looking for work because he cannot survive on the small amount of sales in the bar. The signs have scared off a lot of people. The incident log book shows all the people that he has barred before February 2009.

134He has had a meeting with the waitresses and they have signed the policy again.

135It is a rough time for him. In 26 years in business, he has never had a drug conviction.

136Although he has not searched their rooms, he is positive that the people occupying rooms in the hotel are not involved in drug activity. Most of them have been there for a few years and others stay for a month or two until they find a suitable apartment. Room 3 is no longer a smoking room. It is rented to a seventy year old gentleman.

137Cameras are monitoring the hotel. The people mentioned at the hearing are not coming to the bar. If anyone asks for drugs, they are removed. If they see drug activity by anyone, they are barred forever.

Analysis and Reasons

138The Board has reviewed the evidence and the submissions of the parties.

139The Registrar is asking for a finding of a violation of subsection 45(2) of the O.Reg which reads as follows:

“The Licence holder shall not permit a person to hold, offer for sale, sell, distribute or consume a controlled substance as defined in the Controlled Drugs and Substances Act (Canada) on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder.”

140The Board heard clear, detailed, corroborated and credible evidence from police officers and the AGCO Inspector that on February 27, 2009 there were used dime bags of cocaine found in the women’s washroom which is under the exclusive control of the licence holder.

141A metal key box used for distributing drugs was found attached to the underside of a radiator in the licensed area of the bar. The Board accepts the evidence of Sgt. Starcevic that the box was covered in dust and had not been put there recently. However, the presence of the box and one that was found in the premises on January 15, 2005 indicate that drugs had been distributed from the licensed premises.

142No drugs were found in the licensed premises on February 27, 2009. However, given the quantity of drugs, drug paraphernalia and money found in room 1, the access from that room to room 3, immediately adjacent to the licensed premises, which was used as a smoking room freely accessed by patrons of the establishment, the rental of both rooms by R.B. who was also found to have a large quantity of drug, money and drug paraphernalia in his home as well as drugs and money on his person, the Board accepts the opinion of Sgt. Starcevic, based on his years of experience on a drug squad, that rooms 1and 3 were used as a drug distribution area. The evidence of Ms Douglas that R.B. was a regular customer in the licensed premises and the evidence of Mr. Larocque that R.B. was a handyman and assisted in the premises while he was away connect R.B. to the licensed premises as a patron and an employee. On that date, there were also people in the premises who were associated with those who were known by police to be involved in drug activity.

143Mr. Larocque knew of the drug trafficking charges against R.B. on March 26, 2004 as a result of a search warrant executed in room 16 of the hotel. On January 26, 2005, Inspector Pigeon spoke to him about that incident, advised him that R.B. was on a court ordered condition not to be in Albert’s Hotel for any reason and advised him of the effect of drug activity in the hotel and its detrimental effect on the liquor licence.

144However, as submitted by Registrar’s counsel, Mr. Larocque rented rooms to R.B. in 2009 and hired him as a handyman which gave him free access to rooms as well as the licensed establishment, and did so without checking whether the Inspector or police had any concerns about that. Given R.B.’s history, the Board does not accept as adequate Mr. Larocque’s explanation that he thought that R.B. “would have changed a little since the first occasion.”

145Therefore, the Board finds, on a balance of probabilities, that R.B. was using rooms in the hotel and the licensed premises to distribute illegal drugs. Furthermore, given the past history of R.B and others and the concerns which were conveyed to the licence holder, the licence holder knew or ought to have know of this activity and that giving R.B. free access to the entire hotel, permitted such activity to happen.

146Therefore, the Board FINDS that there was a violation of subsection 45(2) of the O.Reg on February 27, 2009.

147The Registrar also asked the Board to make a finding under clause 6(2)(d) of the LLA, that the past conduct of the licence holder affords reasonable grounds for belief that he will not carry on business in accordance with the law and with integrity and honesty.

148Police Officers and the Inspector gave detailed and credible evidence of a long history of drug activity in the licensed premises between 2001 and 2005. In that period several people were arrested in the premises while in possession of illegal drugs and were charged with possession and/or possession for the purpose of trafficking. A magnetic key box containing drugs used for drug trafficking was also found in the premises on one occasion. However, there is no evidence that drug activity happened in the hotel or the premises between August 2005 and February 27, 2009. Of concern is the evidence for the Licensee that individuals previously involved with drug activity or associated with them were regular patrons in the premises e.g. R.B., G.C. or employed in the premises e.g. R.B. and the partner of O.C. Given their association with drug activities, the Board is suspicious of their presence in an establishment that had a long history of drug activity in the past.

149There is no evidence or even an allegation that Mr. Larocque was involved in drug trafficking in the past or the latest incident. Police Officers and the Inspector indicated that he was cooperative with them.

150Mr. Larocque has taken steps to ensure an operation free of drug activity. He has installed video cameras. After the latest incident, he fired R.B. and the partner of O.C. He issued trespass notices to R.B., G.C., O.C. and their spouses. He posted signs regarding camera surveillance, illegal drugs or drug activity not being allowed in the premises. He has closed the smoking room and rented it to an elderly gentleman whom he believes has no connection to illegal drug activity. He agreed to bar all individuals identified by police as being connected to drug trafficking.

151In its order of April 2, 2009 in which the Board lifted the immediate suspension pending the completion of the hearing, the Board imposed a number of conditions and there is no evidence that those conditions have been breached. There is no evidence of problems in the premises after the February 27, 2009 incident except for the marijuana cigarette found on O.C. on March 6, 2009 when police searched him which the licence holder had no way of knowing that he possessed.

152Although the licence holder made a mistake in judgment about R.B., the evidence does not support a conclusion that he is ungovernable with regard to the future operation of the bar.

153Therefore, the Board makes no finding under subsection 6(2)(d) of the LLA.

Conclusion

154For the reasons given, the Board finds the Licensee violated clause 45(2) of the O.Reg.

155The Board invites written submissions on penalty from the respective parties. The Registrar’s representative shall serve and file written submissions within seven (7) days of the date of this decision. The Licensee’s representative shall have seven (7) days to serve and file a written response. Registrar’s representative may serve and file any reply within three (3) days of 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.

156Furthermore, the Board ORDERS that the conditions imposed in the Board’s Order of April 2, 2009 remain in place until the Board has made a final decision on the disposition of this matter.

DATED AT TORONTO THIS 6^th DAY OF AUGUST, 2009