Registrar, Alcohol and Gaming Commission of Ontario v. 6055885 Canada Inc, 2009 CanLII 78671

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-

6055885 Canada Inc intending to operate as Club Opera (formerly known as Business Club Hee)

Licensee

DECISION

Panel: Patricia McQuaid, Vice-Chair, AGCO Joan Lougheed, Board Member

Decision Date: December 3, 2009

Hearing Location: Toronto, Ontario

Alcohol and Gaming Commission of Ontario 90 Sheppard Avenue East, Suite 300 Toronto, Ontario 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 6055885 Canada Inc, Licensee ) Jaeho Kim, On behalf of the Corporate Licensee

Application

1. The Registrar of the Alcohol and Gaming Commission of Ontario (“AGCO”) issued Notice of Proposal number 17433 (the “NOP”) dated August 6, 2009 to refuse the application to transfer a licence made by 6055885 Canada Inc, (the “Applicant”), operating or intending to operate as CLUB OPERA (formerly known as Business Club Hee), 3200 Dufferin Street, Units 23 and 24B, North York (Toronto), Ontario, M6A 3B2, (the “establishment” or the “premises”), on the basis of allegations of violations under sections 6(2)(d) and 6(2)(f) of the Liquor Licence Act (the “LLA” or the “Act”) and section 29, subsection 45(1) and paragraph 50(c) of Ontario Regulation 719/90 (the “O.Reg”) made pursuant to the LLA. A hearing was held on October 26, 2009 in the City of Toronto.

Preliminary Matters

2. Mr. Jaeho Kim, a principal of the corporate applicant, appeared on behalf of the corporation, and without legal representation. He waived the right to legal representation. Mr. Kim did attend with the assistance of a Korean interpreter, Ms Sukie Won, who was duly sworn.

Decision

3. After considering all the evidence and submissions the Board FINDS that the Applicant violated sections 6(2)(d) and 6(2)(f) of the LLA and section 29, subsection 45(1) and paragraph 50(c) of the O.Reg and REFUSES the application. Reasons for these findings follow.

Registrar’s Evidence

4. Everett Elliott, an officer with the Toronto Police Services (“TPS”) and Marco Michelucci, also an officer with the TPS, attended at the licensed premises on May 9 and June 20, 2009. Police Constable (“P.C.”) Elliott stated that the premises is a karaoke-type bar, with seven private karaoke rooms.

May 9, 2009

5. On the May 9th attendance, the officers were accompanied by AGCO Inspector Josee McFadden. They arrived at 2:56 a.m. The sign outside the establishment read “Club Opera”. They began checking a number of the karaoke rooms. In room #3, they found six patrons sitting on couches around a central table, on which were a quantity of glasses and plates. In particular, P.C. Elliott noted three full shot glasses containing an amber liquid with an odour of alcohol. One of the patrons stated that it was Glenfiddich scotch. A further shot glass contained a small amount of liquor. Also noted were three drinking glasses containing what appeared to be the same liquid and ice cubes.

6. P.C. Michelucci, in his evidence, stated that there were also several pitchers of what appeared to be tea on the table. His understanding was that the tea was mixed with the alcohol in the taller drinking glasses.

7. P.C. Elliott and Inspector McFadden spoke to J.J. who they believed to be the the manager that evening. She was in room #3 at the time of their inspection. She seemed to be interacting with the patrons. Inspector McFadden stated that neither J.J. nor any other staff appeared to be attempting to clean up or removing signs of service. Inspector McFadden advised J.J., that an infraction had been found and that a report would be submitted to that effect. Neither the police officers nor the inspector observed Mr. Kim in the premises during their inspection.

June 20, 2009

8. On this date, the two police officers attended with AGCO Inspectors John Hesch and Don Anderson, arriving at approximately 3:02 a.m. P.C. Elliott checked room #3. There were no patrons there, but plates, glasses and cans were on the table. Two of the highball glasses were half full of an amber coloured liquid with the odour of alcohol. A shot glass contained a small amount of the same liquid. He checked the garbage can in the room. It contained a 750 ml bottle of Johnny Walker Black Label scotch. He also noted that a number of the fire exit signs were unlit. On cross-examination, P.C. Elliott stated that while he had no specific recollection, he thought that these lights were fixed on his subsequent attendance at the premises.

9. Inspector Anderson took samples from each of the two glasses. Exhibit 1 is the documentation in respect of these samples. The certificates of analysis indicate that the samples were alcohol and suspected to be scotch whiskey.

10. Inspector Anderson also noted, prior to leaving, that two fire exit lights, one over room #1 and one at the entrance were unlit. These unlit signs were also noted by Inspector Hesch.

11. P.C. Michelucci, with Inspector Hesch entered room #6. Two males were in this room, a waiter named Alan and a patron. Two tumbler size glasses were on the table, each containing a small amount of amber liquid which smelled of alcohol. His sense of the situation was that Alan was interacting with the male as a patron, not as staff.

12. P.C. Michelucci spoke to the patron who stated that he had been at Club Opera since 11:00 p.m. and had ordered one large bottle of “Johnny Walker” and two small ones. The bill in front of the patron was in the amount of $500. The male’s speech was slurred and there was an odour of alcohol on his breath. He stated repeatedly that he was drunk and became increasingly belligerent and argumentative. On cross-examination, P.C. Michelucci stated that he did not use breathalyzer equipment to determine the patron’s alcohol level.

13. Inspector Hesch was with P.C. Michelucci in room #6. The patron indicated to him that the glasses contained scotch. The patron was very talkative though unable to finish complete sentences. His eyes were red and watery and he was unsteady on his feet. He was having difficulty speaking, but Inspector Hesch indicated that that may have been the result of lack of facility with English.

14. Before leaving the premises on June 20th, Inspector Anderson spoke to Mr. Kim, advising that infractions had been observed and that a report would be submitted to his superiors for review.

Subsequent Attendances

15. P.C. Elliott stated that he had checked the premises on several occasions subsequent to August 6, 2009, the date of issuance of the NOP. The premises was generally not open. However on October 1, 2009, the signage for the premises was lit. He entered with two uniformed officers and met with Ham Je Jay Cho, the licence holder and Bog Kyeong Kim, one of the applicants. On inspection, he discovered four of the five rooms were occupied, with alcohol being consumed by the patrons. In particular, he saw a one-half full bottle of “Crown Royal” on the table in room #2 with shot glasses on the table and in room #4, an empty 750 ml bottle of Glenfiddich scotch with shot glasses, all containing alcohol. A large quantity of alcohol was seized from the office area, about which Ms Kim was upset.

16. P.C. Elliott explained to Mr. Cho and Ms Kim that the premises should not be operating because of the outstanding NOP. P.C. Elliott stated that the City of Toronto and AGCO records indicated that the business was sold and registered to Mr. Kim and Bay Kyeong Kim and therefore could not be operated under Mr. Cho’s name.

17. In response to this evidence, through cross-examination of P.C. Elliott, Mr Kim stated that he and Mr. Cho attended at the AGCO on September 30, 2009 and were told that Mr. Cho could operate the business and purchase alcohol on the licence though at this time the business licence was in the name of 6055885 Canada Inc, the transfer applicant.

Applicant’s Evidence

18. Jaeho Kim expressed his remorse for what has occurred at the premises. He had never been involved in such a business before and did not know the requirements of the LLA.

19. However, in the interim, he has installed cameras to monitor the karaoke rooms and smoke detectors and has produced a handbook (Exhibit 2) for better management of the business and to prevent further such incidents.

20. In terms of the evidence of infractions on May 9 and June 20, 2009, Mr. Kim took issue with the fact that while the patron may have seemed drunk, no breathalyzer evidence was presented and that the fact of an empty liquor bottle in one of the rooms should not have been a problem. Further, he found it odd that samples were taken on June 20th, but were not shipped to the lab until July 6, 2009.

21. In his evidence, he reiterated that he attended at the AGCO offices on September 30th with Mr. Cho and was told that Mr. Cho could operate the business and purchase liquor on the licence. He stated that he was not running the business on October 1st, but that Ms Kim was acting as Mr. Cho’s manager. Ms Kim does not speak English so he questioned how the officers could have conversed with her.

22. Regarding ownership of the business, Mr. Kim stated that though he bought the business there was a condition attached that the lease agreement that the licence transfer had to be completed in his favour. To purchase without a licence would, he said, make no sense.

23. In terms of the future operation of the business, it is his intention to be there everyday to supervise staff. His absence on May 9 and June 20 may have contributed to the problems on those dates.

24. On cross-examination, Mr. Kim confirmed that he bought the business from Mr. Cho on December 30, 2008 and he is negotiating with the landlord regarding a new lease.

25. He generally worked on Monday and Wednesday evenings. He did attend on June 20th after staff called to say police were on site. His practice was not to allow patrons to stay after 2:45 a.m., but acknowledged that on the dates in question, patrons were present. He stated that it was a cultural thing; most of his patrons are Korean and it is their practice to stay and socialize after hours though they know they cannot drink. His six staff had Smart Serve certification as did Ms Kim. He is working on getting the Smart Serve certificate.

26. Regarding the handbook, Mr. Kim stated that he finished it about a week before the hearing. Upon questioning from Mr. Kulis, he firmly stated that he prepared it himself, with no help from others. When Mr. Kulis, in questions, pointed out some errors, for example, that the legal drinking age is 19 not 21 as stated in the handbook or that it was permissible to serve free drinks, or the errors on hours of service cited – 6:00 a.m. to 2:00 a.m., Mr. Kim responded that he is aware that he has to correct a few things in the handbook and improve upon it. He did state that he had included information from American websites in the handbook – for example, reference to MAST (Mandatory Alcohol Server Training) or a “vertical” format licence.

Reasons/Analysis

27. Mr. Kulis submits that the evidence supports a finding that violations of the specific regulations alleged have occurred. The Board agrees.

28. In particular, on May 9, 2009, the evidence from the police officers and the AGCO inspector was clear and consistent. Glasses containing various amounts of alcohol were on the table in room #3. Six patrons were in the room. It did not appear from the evidence that any attempt had been made by staff to clear the signs of service and consumption in this room. Two of the witness had made note of the time. It was 2:56 a.m. Mr. Kim did not dispute these facts. He acknowledged that patrons were present, but was not present himself.

29. Therefore, based on the evidence, the Board finds a violation of section 29 of the O.Reg on May 9, 2009.

30. Again, on June 20, 2009, the two police officers attended, accompanied by AGCO Inspectors Anderson and Hesch. And again, in room #3, although no patrons were present, the signs of service were not cleared. It was approximately 3:02 a.m. On this occasion, not only did P.C. Elliott and Inspector Hesch smell the contents, but additionally samples were taken, which tested as alcohol.

31. P.C. Michelucci and Inspector Hesch entered room #6, where signs of the service of alcohol were also observed, two glasses containing an amber liquid which smelled of alcohol. Given the clear evidence, again not contradicted by Mr. Kim, the Board finds a violation of section 29 of the O.Reg on June 20, 2009.

32. Present in the room #6 were two males, a patron and staff person. P.C. Michelucci and Inspector Hesch gave evidence about signs of intoxication observed in the patron: slurred speech, belligerent and argumentative manner, red and watery eyes and unsteadiness on his feet. The patron was forthcoming about the amount of liquor purchased since his arrival at 11:00 p.m. though there is no evidence about how much of that was consumed by him or by others. The signs of intoxication observed lead to a conclusion, on the balance of probabilities, that the patron was drunk. Breathalyzer evidence is not in any way critical to such a conclusion; it can do no more than fortify such a conclusion.

33. Having made a finding that the person was drunk, the next issue, essential for a finding under subsection 45(1) of the O.Reg is that the drunkenness was permitted by the Licensee. The Board does not have the benefit of evidence from the staff person. The evidence before the Board on this point is that the patron was in the premises since approximately 11:00 p.m. Observations were made at approximately 3:00 a.m., four hours later. Alcohol was still, it appears, being consumed and a significant amount of alcohol was purchased. A staff person was the only other person in the room with the patron and seemed to be talking with the person. The signs of intoxication readily apparent to the police officer and inspector ought to have been apparent to staff, yet at 3:02 a.m., the patron was still in the premises. Based on the evidence, the Board finds a violation of subsection 45(1) of the O.Reg, “permit drunkenness”, on June 20, 2009.

34. Regarding paragraph 50(c) of the O.Reg, the unlit fire exit signs, the evidence is clear that there were at least two such signs that were not illuminated on June 20, 2009. Compliance with the Fire Protection and Prevention Act, 1997 is essential for the safety of patrons and staff. This breach may well have been rectified subsequently, but the fact remains that on the date in question, there was a breach. The Board therefore finds a violation of paragraph 50(c) of the O.Reg.

35. On the dates in question, Club Opera was an applicant seeking a transfer of the licence. It was, on the relevant dates, operating the business. Having made findings stated above, the Board must also conclude that the Applicant is in violation of section 6(2)(f) of the LLA, having carried on activities in contravention of the Act and regulations.

36. Finally, regarding section 6(2)(d) of the Act, Mr. Kulis stated in submissions that generally, where there are violations alleged of the nature here, where the Applicant shows remorse, and where there is a plan of action to prevent further contraventions, the Registrar may not pursue a finding of section 6(2)(d): the past or present conduct of the Applicant… affords reasonable grounds for belief that its business will not be carried on in accordance with the law and with integrity and honesty. In this instance, however, Mr. Kim has produced a handbook (Exhibit 2) which is rife with errors revealing a tenuous grasp of the LLA. Rather than see it as a step in mitigation, Mr. Kulis suggests it is an aggravating factor and cause for a finding to be made against the Applicant.

37. There is no question that Mr. Kim has stated that he is sorry for what has happened. The Board also accepts his testimony that he has invested in the business and has installed cameras in the rooms as a proactive measure. Mr. Kim may have good intentions, but his conduct in operation of the business since January 2009 raises concerns. He stated that he worked at the business on Monday and Wednesday nights, yet also stated that he has not yet received his Smart Serve certification, though the O.Reg requires that he be certified at this time. He stated that his staff were Smart Serve certified, yet he will require them to take an education course on the LLA. The particulars of what and where were not stated, which strikes the Board as a pat response to the concerns.

38. The handbook raises serious alarm bells as the Board considers whether, given all the facts before it and the violations found (for which Mr. Kim could not provide a reasonable explanation, but the fact that customarily his patrons would stay after hours though not to drink), the licence should be transferred. As indicated through the cross-examination of Mr. Kim, his authorship of the handbook reveals a startling lack of knowledge of the LLA and its regulations. The concern is exacerbated by the fact that Mr. Kim put this forward as a remedial tool for his staff. In the circumstances the assertion by Mr. Kim that he will run a “hands-on” operation, in such ignorance of the law, and his responsibilities as a licensee, instills no confidence that his premises can be operated in compliance with the LLA.

39. In the circumstances, therefore, the Board makes a finding pursuant to section 6(2)(d) of the LLA and refuses the application to transfer the licence.

40. The Board recognizes that this decision may have significant ramifications for Mr. Kim. However, the decision does not preclude Mr. Kim from applying in the future (though not before two years have elapsed) at a time where he can show that he has acquired the requisite knowledge to suggest a capability to operate the business in accordance with the law.

Order

41. Therefore, having made the FINDING of violations of sections 6(2)(d) and 6(2)(f) of the LLA and section 29, subsection 45(1) and paragraph 50(c) of the O.Reg, the Board REFUSES the application to transfer a liquor licence made by 6055885 Canada Inc, operating or intending to operate as CLUB OPERA (formerly known as Business Club Hee), 3200 Dufferin Street, Units 23 and 24B, North York (Toronto), Ontario, M6A 3B2.

DATED AT TORONTO THIS 3rd DAY OF December, 2009.

PATRICIA MCQUAID, VICE-CHAIR JOAN LOUGHEED, BOARD MEMBER