Registrar, Alcohol and Gaming Commission of Ontario v. Thorold Winery Ltd, 2009 CanLII 78674

ALCOHOL AND GAMING COMMISSION OF ONTARIO

IN THE MATTER OF The:

Liquor CONTROL Act, R.S.O. 1990, c. L.18, paragraph 3(1)(E)

B E T W E E N:

Registrar, Alcohol and Gaming Commission of Ontario

Registrar

-and-

Thorold Winery Ltd operating as R. DiFruscia Winery

Licensee

DECISION ON sanction

Panel: David C. Gavsie, Chair, AGCO Brian J. Ford, Board Member

Decision Date: December 2, 2009

Hearing Location: Niagara Falls, Ontario

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

Appearances

Registrar, Alcohol and Gaming Commission ) Joyce Taylor, Representative

Thorold Winery Ltd, Licensee ) Edward Tonello, Representative

Allegations

1. A hearing into Notice of Proposal (“NOP”) number 16855 dated November 20, 2008 to suspend the Authorization to Operate an On-site Grape Winery Retail Store (the “Authorization”), issued to Thorold Winery Ltd (the “Licensee”), operating as R. DIFRUSCIA WINERY, 75 Ormond Street South, Thorold, Ontario, L2V 4V7, manufacturer’s licence number 17644, on the basis of alleged violations of condition 10 of the Authorization and subsections 3(1)(a) and 3(1)(c) of Regulation 659/00 (“O.Reg 659”) under the Wine Content and Labelling Act, 2000 (the “WCLA”), was held on March 5 and May 8, 2009 in the City of Niagara Falls.

Decision

2. In its Decision dated October 28, 2009, the Board found the Licensee breached condition 10 of the Authorization and subsections 3(1)(a) and 3(1)(c) of O.Reg 659 under the WCLA. Parties were directed to provide written submissions on an appropriate sanction. The Board has received and reviewed those submissions.

Registrar’s Submissions

3. Richard Kulis, for the Registrar, notes that the Board has made findings for all the violations alleged by the Registrar in the NOP.

4. Mr. Kulis then stated that it is evident from the Board’s decision that the Licensee relied on blaming others for the problems while the “others” turned the blame to the Licensee. No one, he suggested, offered to step up and take control of either the records and process in question at the hearing nor future requirements.

5. Mr. Kulis stated it is the Licensee's responsibility to ensure compliance and that responsibility does not diminish due to the Licensee's age. The Licensee, he noted, can delegate to competent people, however, the Licensee is still responsible for the action of those people.

6. Mr. Kulis suggests the Licensee has failed to install people who will competently execute their jobs on behalf of the Licensee and the Licensee has failed to adequately provide a plan to the Board that will ensure the proper execution of his legal obligations.

7. Therefore, Mr. Kulis stated, there are no mitigating circumstances, and he submits that a 30 day suspension of the Authorization to Operate an On-Site Grape Winery Retail Store should be imposed, primarily as a specific deterrent and secondarily as a general deterrent.

Licensee's Submissions

8. Mr. Tonello, counsel for the Licensee, notes for the Board that the Licensee had successfully passed all audits prior to the time in question and the Alcohol and Gaming Commission of Ontario (“AGCO”) has not alleged any non-compliance with audit requirements subsequent to the time in question.

9. Mr. Tonello noted that Mr. Kulis submitted that the Licensee is “blaming others” while “others” are blaming the Licensee. Mr. Tonello noted that Mr. Kulis made such a statement without the benefit of being present at the hearing. Mr. Tonello stated that during the hearing there was no finger pointing.

10. Mr. Tonello states Mr. DiFruscia, his bookkeeper Chris Muelli, and his son-in-law David Glencross, accepted their respective responsibility for the unfortunate confluence of a one-time event.

11. Mr. Tonello stated Mr. Muelli was exclusively responsible for maintaining records between August 2005 and September 2007, at which time, he was debilitated by serious health and personal family issues that restricted his ability to discharge his duties but he attempted to do so to the best of his ability.

12. Mr. Tonello noted that during the time of Mr. Muelli's sickness, Mr. Glencross, who had moved from Ottawa to St. Catharines, used his spare time to assist at the winery.

13. Mr. Muelli withdrew from keeping the tank records and Mr. Glencross drifted into filling the vacuum.

14. Mr. Tonello stated that in September 2007, Mr. Muelli's health and family issues stabilized and he began to spend more time discharging his administrative winery duties with respect to blending, bottling and sale records.

15. Mr. Tonello stated that Mr. Muelli, at this time, assumed that Mr. Glencross was continuing to keep tank records at the same time Mr. Glencross assumed that Mr. Muelli had resumed the task of keeping tank records.

16. The failure of the winery to keep tank records for eight months between August 1, 2007 and April 6, 2008 is, in Mr. Tonello's belief, attributable to a mutual misunderstanding between Mr. Muelli and Mr. Glencross, each assuming the other was keeping the records.

17. Mr. Tonello noted that the Licensee principal, Rocco DiFruscia, age 81, is a one-man operation who works without staff and lives alone in a building that houses his grocery store and winery.

18. Mr. Tonello noted that Mr. DiFruscia has lived and worked in Thorold since the early 1950's, including his present location for more than 20 years. Mr. Bill Longo, the former mayor of Thorold and councillor in the Regional Municipality of Niagara, Mr. Glencross, and Mr. Muelli testified to his hard-working ethic and no previous trouble with the law.

19. Mr. Tonello disputed the Registrar's assertion that the Licensee has “failed to adequately provide a plan to the Board that will ensure the proper execution of his legal obligations".

20. Mr. Tonello noted that the auditors admit that the winery is a micro operation and the evidence at the hearing is that Mr. Muelli has recovered from his personal problems sufficiently to allow him to adequately discharge his audit responsibilities with the winery as he has done in the years prior to the time in question.

21. The Licensee respectfully submitted that the principles of punishment, deterrence and rehabilitation are not an issue, for the following reasons:

• The Licensee did not benefit from the breach of the audit requirements.
• The occurrence of the breach of audit requirements is attributable to a one-time confluence of events.
• The audit requirements are back in the hands of the same person who adequately discharged the winery's audit obligations before the time in question. Mr. Muelli having sufficiently stabilized from the health and family issues that debilitated him from fulfilling such obligations during the time in question. As a backup and overseer, the Licensee has his son-in-law, David Glencross.
• The nature of the breach was inadvertent, not willful.

22. Mr. Tonello stated that in consideration of all of the above circumstances, the Licensee respectfully submitted that a suspension of three days would satisfy the public need for punishment, deterrence and rehabilitation.

Decision and Sanction

23. The Board has carefully considered the evidence before it and the submissions on sanction by the Registrar's counsel and the Licensee's counsel.

24. The evidence before the Board clearly showed that during the audit period in question, records were not kept. However the evidence clearly showed that it was an assumption on the part of each of the two individuals, namely Mr. Muelli and Mr. Glencross, that the other was doing the record keeping when in fact neither was.

25. The evidence at the hearing also shows at the time that Mr. Muelli was struggling with family issues and dealing with a bout of cancer and was not able to continue to do the work he had to that point. Mr. Glencross had taken over the duties but had not fulfilled them adequately.

26. The evidence also showed that Mr. DiFruscia who is 81 years of age assumed the records were being kept. The evidence also showed that Mr. DiFruscia was not much on record keeping and relied on others to perform that function for him.

27. The Board also notes that the winery and Licensee had no previous infractions and the owner, Mr. DiFruscia, was a highly respected member of the Thorold community, having contributed in a significant way to the community.

28. The Board also notes that Mr. Muelli was struggling with a very serious disease and was incapacitated by it.

29. The Board also notes there was little communication between Mr. Muelli and Mr. Glencross during this time period due, in a large part, to Mr. Muelli's illness.

30. The Board agrees with Registrar's counsel that there does have to be a penalty imposed for specific deterrence and general deterrence. However the Board does not agree that there are no mitigating circumstances.

31. A long, unblemished record of many years to the stage where he is 81 years of age, coupled with the serious illness of his record keeper and the inexperience of his son-in-law and the fact that there have been no other violations since or before are circumstances that must be considered when dealing with the penalty.

32. The Board also recognizes the importance of keeping proper and detailed records of Tank, Blending and Bottling records in the winery industry.

33. Therefore the Board ORDERS, for a specific deterrence and a general deterrence, that there be a TEN (10) day suspension of the Authorization to Operate an On-Site Grape Winery Retail Store issued to Thorold Winery Ltd., operating as R. DIFRUSCIA WINERY, 75 Ormond Street South, Thorold, Ontario, L2V 4V7, manufacturer’s licence number 17644.

Conclusion

34. 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 this decision.

DATED AT TORONTO THIS 2nd DAY OF December , 2009.

DAVID C. GAVSIE, CHAIR, AGCO BRIAN J. FORD, BOARD MEMBER