Registrar, Alcohol and Gaming Commission of Ontario v. 535702 Ontario Inc. O/A Albert’s Hotel, 2009 CanLII 69676

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 ON SANCTION

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

Decision Date: October 2, 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

1. A 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.

2. In its decision dated August 6, 2009, the Board found the Licensee violated subsection 45(2) of the O.Reg. and directed the parties to provide written submissions on an appropriate sanction. The Board received and reviewed those submissions.

Registrar’s Submissions

3. The Licensee has served 24 days of an interim suspension. The Board imposed several conditions on the Licence when the interim suspension was vacated. In some cases that disciplinary action may be sufficient but not in this case for the following reasons.

4. The Licensee had prior knowledge and warnings regarding not only drug activity associated with the premises but also the individuals involved. Drug activity resumed and was carried on by someone who was known to have been a drug dealer. The 2009 drug dealing was an identical repeat of the drug activity that the Licensee was warned about.

5. Once apprised of the interim suspension the licence holder needed to rely on Registrar’s counsel and the Board’s conditions to remedy the problem. The Licensee was either not motivated to develop policies and procedures to deter drug activity or incapable of doing so.

6. The issue now presented is not one of ungovernability but of capability. A repetition of drug activity in the premises would normally call for revocation of the liquor licence.

7. However, if not a revocation, a greater suspension than already served, an additional 14-21 days, plus the conditions imposed at the end of the first day of hearing should be imposed. This is a case where a specific deterrent is required.

Licensee’s Submissions

8. In its decision, the Board found that although the licence holder made a mistake in judgment about R.B., the evidence did not support that he was ungovernable and dismissed the allegations of a violation of section 6(2)(d) of the LLA. The Board found the licence holder to be in violation of subsection 45(2) of the O. Reg. However, revocation would not be an appropriate disposition on the facts of this case.

9. The Registrar would appear to have shifted ground and appears to argue notwithstanding the Board’s dismissal of 6(2)(d) allegation that a revocation should be ordered now on the basis of alleged “incapability” on the part of the Licensee which is not supported by evidence. When the immediate suspension was imposed by the Registrar, the Licensee requested a reconsideration and the lifting of the immediate suspension order on terms considered reasonable and appropriate pending the holding of a hearing by the Board but it was refused and the establishment remained closed from March 6th to March 30th. Following the first day of the hearing, the Board found that the Registrar had acted inappropriately in ordering an immediate suspension and ordered the immediate reinstatement of the Licence pending such further or other order of the Board after the conclusion of the hearing which was continued at a later date.

10. In considering what would be an appropriate disposition for the ‘mistake in judgment about R.B.’ which would appear to have formed the basis of the Board’s decision, a review of some of the facts should be made. The Board found that R.B. was known to the Licensee as was his prior involvement with the law following his 2004 conviction. The Licensee believed that R.B. had changed his ways and at the age of 68 was no longer involved in that type of activity.

11. Allowing R.B. to re-enter the premises was a clear mistake in judgment but the Licensee had no knowledge of R.B.'s activities. There was not evidence of any illegal activity in the premises or on the part of R.B. until February 27, 2009 when the search warrant was executed.

12. No drugs were found on the licensed premises on February 27, 2009. A magnetic metal box attached to the underside of a radiator was found in the premises but the dust found on it supports the conclusion that no use had been made of it recently. It was not readily discoverable and its concealed presence should not be used to infer either actual knowledge or wilful blindness on the part of the Licensee to illegal drug activity occurring on the premises or that it was being tolerated.

13. Three “dime” bags were apparently located in the women’s washroom but the evidence of where it was located varies depending on the source and the sequence of observation. But there is no evidence of the source of the “dime” bags.

14. The Manager and Mr. Larocque gave evidence as to what was being done to discourage illegal drugs or drug activity in the washrooms and on the premises. Such activity was actively discouraged and patrons were barred for such activity. Although all persons present in the bar were searched, no illegal drugs were found.

15. The immediate suspension has had both a financial as well as a personal impact. The Licensee has experienced an ongoing drop in business to the extent that the Hotel is only currently surviving because of the reserve from room rentals. The financial and emotional impact on Mr. and Mrs. Larocque, as a result of having to return from Peru to deal with this matter, has been significant.

16. The shutdown of the bar from March 6th to March 30th inclusive is more than sufficient to satisfy the ends of justice in this case. Any further penalty or suspension would be unfair and unjust.

Registrar’s Reply

17. There was no reply submitted.

Analysis/Reason/ Findings

18. The Board finds that an additional 10-day suspension is appropriate in the circumstance of this case for the following reasons.

19. An immediate suspension of the Licence was imposed by an Order of the Registrar dated March 6, 2009 and the suspension continued until March 30, 2009 when the Board orally rescinded the Order on conditions it imposed on the licence as stated in its written Order of April 2, 2009.

20. An immediate suspension of a licence prior to a hearing is a serious measure that the Registrar can take under section 15(6) of the LLA if he or she considers it to be necessary in the public interest.

21. The Board disagrees with the submission for the Licensee that in rescinding the Registrar’s Order, the Board found that the Registrar had acted inappropriately. The evidence of the large quantity of drugs, drug paraphernalia and money found in the room occupied by R.B., his past history, and the history of drug related activity in and around the premises and the presence of individuals involved with drug activity raise a serious public interest concern for the Registrar as well as the Board.

22. A Licensee is responsible for what happens in a licensed establishment and is required to exercise control over the business and premises. The Licensee was not in control on February 29, 2009.

23. Given that there was no direct evidence that the Licensee was involved in the drug activity or had knowledge of it and no evidence of drug activity in the premises between 2005 and 2009, the Board finds that the revocation of the Licence is not appropriate in this case.

24. However, the Board agrees with the Registrar’s submission that the Licensee had prior knowledge and warnings regarding not only the drug activity associated with the premises but also the individuals involved. There is clear evidence that a drug distribution operation was being conducted by R.B. in Albert’s Hotel on February 29, 2009, an operation similar to the one conducted by him in the past. Mr. Larocque is an experienced operator and as such should have instituted strict procedures to ensure that no drug activity happened again. However, any steps taken by him did not deter that activity.

25. The Board accepts the submission that permitting R.B. to re-enter the premises was clearly a mistake in judgement on the part of Mr. Larocque. However, it was more than allowing him to re-enter the premises. Mr. Larocque hired R.B. as a handyman, rented to him a room with a connecting door to the smoking room used by patrons which was right beside the licensed premises thus giving him an ideal situation for his drug activities.

26. Believing that R.B. had changed his ways is an admirable quality in Mr. Larocque as an individual. However, as a licence holder with the responsibility to ensure that no drug activity happens in premises under his control, permitting R.B. to be in the Hotel in any capacity and to do so without checking with the police or the AGCO Inspector was foolhardy or naive in the extreme.

27. The Board agrees that the Licensee needed to rely on Registrar’s counsel and the Board’s conditions to remedy the problem since any actions taken previously did not work. Mr. Larocque installed surveillance cameras just prior to the latest incident. The Board takes no comfort about their deterrence effect based on the evidence of the Manager who stated that they are not monitored and are only checked by Mr. Larocque if staff reports an incident.

28. After speaking with Registrar’s representative subsequent to the immediate suspension order, Mr. Larocque did issue trespass notices to some individuals and did post signs about illegal activity and drugs not being allowed. However, in his evidence, Mr. Larocque indicated that he does not do drugs and does not think like the dealers but will have to learn to think that way. As a result, the Board has some reservations about how effective he will be in recognizing and preventing drug activity, although his willingness to learn is commendable. It is, in the Board’s view, absolutely necessary given the latest incident.

29. Although there were no drugs found in the licensed premises, the evidence of the ‘dime’ bags in the women’s washroom shows illegal drug activity in an area under the exclusive control of the Licensee. The policies in place did not work. As submitted, video monitoring of washrooms or strip searches of patrons before they enter the premises is not a viable option, but controlling access to washrooms is. Putting locks on washroom doors with access by keys controlled by staff at the service bar or in an area monitored by video cameras would put patrons on notice that their activities are being monitored.

30. Any suspension of a licence has a financial impact on the business and an emotional impact on the operator. However, that is part of the deterrence factor of any suspension.

31. The Board takes any drug activity on and around licensed premises very seriously. This present incident is one of the most serious types of illegal activities that the Board deals with in licensed premises. This was a well organized drug distribution operation and the second of its kind operated by the same person in Albert’s Hotel and that type of activity would normally results in a revocation or a suspension on the higher end of suspensions imposed by the Board.

32. The Licensee has served a 24-day suspension to date. For the reasons given above, the Board finds that an additional suspension of 10 days is appropriate as a specific deterrence in this case as well as a general one.

Order

33. Therefore, the Board ORDERS that the liquor licence number 10188 issued to 535702 Ontario Inc. operating as ALBERT’S HOTEL, 122 Mountjoy Street South, Timmins, Ontario, P4N 1T1, be SUSPENDED for an additional TEN (10) consecutive days.

34. Furthermore, the Board ORDERS that the CONDITIONS imposed in the Board’s Order of April 2, 2009 remain on the licence.

35. The Licensee shall submit proposed suspension dates in writing to the Manager of Hearings, Hearings Department, Alcohol and Gaming Commission of Ontario at the address on the front of this decision within seven (7) days of the date of this decision. The Board will set suspension dates without further notice to the Licensee if proposed dates are not provided within that time. The suspension must be served on days the establishment normally operates. The suspension may not start earlier than twenty (20) days from the date of this decision and must be completed within ninety (90) days of the date of this decision.

DATED AT TORONTO THIS 2nd DAY OF October, 2009

KIRSTI HUNT, VICE-CHAIR, AGCO ALLAN HIGDON, BOARD MEMBER