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-
1761097 Ontario Ltd. operating as Captain Wispers Restaurant & Sports Bar
Licensee
DECISION
Panel: David C. Gavsie, Chair, AGCO Allan Higdon, Board Member
Decision Date: May 19, 2010
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 ) Phillip Morris, Representative
1761097 Ontario Ltd., Licensee ) Nyder Fearon, On her own behalf and ) on behalf of the Corporate Licensee
Allegations
- A hearing into Notice of Proposal (“NOP”) number 17619 dated October 26, 2009 to revoke liquor licence number 805196 (the “Licence”) issued to 1761097 Ontario Ltd. (the “Licensee”), operating as CAPTAIN WISPERS RESTAURANT & SPORTS BAR, 325 Weston Road, Unit 6C, Toronto, Ontario, M6N 4Z9, (the “establishment” or the “premises”), on the basis that the Licensee is disentitled to a licence under clauses 6(2)(a), 6(2)(d), 6(2)(e), or 6(2)(f) of the Liquor Licence Act (the “LLA”) was held on March 30, 2010 in the City of Toronto.
Decision
The Board DECLINES to make a finding that the Licensee contravened clauses 6(2)(a) or 6(2)(f) of the LLA or subsection 45(1) of the LLA. The Board does made FINDINGS that the Licensee breached each of clauses 6(2)(d) and 6(2)(e) of the LLA.
Due to the FINDINGS made by the Board under clauses 6(2)(d) and 6(2)(e) of the LLA, the Licensee is not entitled to have a liquor licence. Accordingly, the Licensee’s licence, number 805196, is hereby REVOKED. Reasons follow.
Preliminary Matters
Ms Nyder Fearon, principal of the corporate Licensee, indicated she would be representing the Licensee. She was advised the Licensee could be represented by an authorized representative. She indicated she knew that, but she waived the Licensee’s right to be so represented.
Mr. Morris stated that he had not received any disclosure material from the Licensee or Ms Fearon but he was prepared to proceed in the absence of a Board Order regarding disclosure.
Member Higdon outlined for Ms Fearon the steps of the hearing.
Mr. Morris introduced two exhibits:
(a) Exhibit 1 – the Registrar’s Book of Documents (180 pages); and
(b) Exhibit 2 – updated retail sales tax accounts dated March 29, 2010 for:
(i) 1174265 Ontario Inc. (“117”); and
(ii) 1761097 Ontario Ltd. (“the Licensee).
- Mr. Morris gave an overview of three corporations involved in this matter at different time periods:
(a) 117 – it was incorporated on April 12, 1996 (page 1 of Exhibit 1). One director was Selvin Harris (page 2 of Exhibit 1). He was also its President (page 3 of Exhibit 1). Another director was Horace Harris (page 3 of Exhibit 1). Horace Harris was also an officer (page 4 of Exhibit 1).
– between 1996 and 2008, corporate return for 117 were filed by Selvin Harris (page 6 of Exhibit 1).
– in the application for its first liquor licence on August 16, 1996, the ownership of voting shares of 117 was stated to be: Selvin Harris – 51%, Horace Harris – 49%. Also, the restaurant was called “Peggy One Stop Restaurant” (page 8 of Exhibit 1).
– in the same application signed by its President, it was indicated that he would manage the business (page 9 of Exhibit 1).
– in the application for a retail sales tax licence (Ontario), Selvin Harris was identified as the President (pages 10 and 11 of Exhibit 1).
– on January 23, 2007, 117 surrendered its liquor licence (page 56 of Exhibit 1).
(b) 2028121 Ontario Inc. (“202”) – on February 14, 2005 there was a sale of all assets and liabilities concerning the business known as Wispers Restaurant Sport Bar and Social Club being carried on at 325 Weston Road, Unit 6C, Toronto from 117 to 202 (pages 42 and 43 of Exhibit 1). A resolution was signed by shareholders of both companies.
– authorization to contract out the premises’ liquor licence from 117 as licence holder to 202 as transfer applicant was issued by the Alcohol and Gaming Commission of Ontario (“AGCO”) on March 10, 2005 (page 47 of Exhibit 1)
– by letter dated March 22, 2005, 117 advised the AGCO that the sale of the business – Wispers Restaurant – had been completed on March 15, 2005 (page 48 of Exhibit 1)
– the application for a liquor licence by 202 was yellow flagged by the AGCO and all documents were returned to Constantine Adolphus Harris (page 54 of Exhibit 1).
– 202 was incorporated on June 12, 2003 (page 23 of Exhibit 1). Constantine Harris was a director and officer of 202 (page 24 of Exhibit 1). An initial corporate return was filed (page 2 of Exhibit 1).
(c) the Licensee – the Licensee was incorporated on February 13, 2008 (page 103 of Exhibit 1).
– Ms Fearon is its President and a director (page 103 of Exhibit 1). She also registered its business name (page 110 of Exhibit 1).
– the Licensee applied for its liquor licence on April 23, 2008 and was issued its licence on February 6, 2009 (page 139 of Exhibit 1).
– the NOP was issued October 26, 2009.
Mr. Morris gave an overview of the Registrar’s case. It is the Registrar’s position that 117 owes $26,000 in retail sales tax. 117 was a front for Constantine Harris. Selvin Harris was also a front for Constantine Harris.
Further, the Licensee has not paid any retail sales tax since 2009 from its operation of the business in the premises. Ms Fearon is a front for Constantine Harris. The application for a liquor licence by the Licensee was a sham using false information. There is a mixture of funds between Ms Fearon and Constantine Harris.
Mr Morris continued that retail sales tax is owed by both 117 and the Licensee. There is a mixing of funds. Ms Fearon is responsible for 117’s debt also.
117, 202 and the Licensee operated from the same location and had/have the same liquor licence number.
Registrar’s Evidence
Stanley Gerkes gave evidence. He works for the Ontario Ministry of Revenue as a field collection officer. Mr. Gerkes referred to Exhibit 2, indicating they were updated statements of account through the day before the hearing. 117 owes a total of $26,905.66 of tax, penalties and interest.
The earliest amount showing on Exhibit 2 for 117 was from an audit before December 31, 2001. The Ministry of Revenue made a request to the AGCO on June 30, 2009 for a hearing to suspend or revoke the Licence (pages 149 and 150 of Exhibit 1). The concerns of the Ministry were the estimated returns and returned cheques twice.
As set out on page 150 of Exhibit 1, Selvin Harris claimed he obtained a liquor licence for 117 for his brother Constantine Harris to operate. The Ministry’s records show that cheques and returns were signed by Constantine Harris and Nyder Fearon, noted to be Constantine Harris’ girlfriend.
Mr. Gerkes stated that the Ministry only had estimated sales tax payable by the Licensee which with tax, penalty and interest added up to $11,657.61 as of the day before the hearing. The Licensee has not filed any returns nor made any payments as of the time that Mr. Gerkes was giving his evidence.
Mr. Gerkes said that returns should have been filed by the 23^rd^ of the next month after the reporting period, and any moneys owing should be paid with the return on filing.
Mr. Gerkes referred to page 15 of Exhibit 1. These are notes from an audit interview of the Ministry of Revenue. The auditor conducting the interview puts these notes into the Ministry’s system. The notes are from an interview on February 20, 2002 with Constantine Harris, described as the owner of Wispers Restaurant Sports Bar at 325 Weston Road, Unit 6C, Toronto. The audit period was July 1, 1998 to December 31, 2001.
On page 16 of Exhibit 1, the notes state that Constantine Harris said he operated the restaurant since 1999. Before that, his brother operated it. The interview confirmed that Constantine Harris was preparing retail sales tax returns since 1999.
On page 17 of Exhibit 1, the notes indicate a tour of the premises took place at 9:00 a.m. on February 20, 2002, and that Constantine Harris, the owner, was present.
On page 18 of Exhibit 1, the notes indicate that on May 31, 2002, an audit summary was presented to Constantine Harris as owner. There was no reference to Selvin Harris or any other person named Harris in the notes.
Mr. Gerkes explained that page 19 of Exhibit 1 was a notice of objection, appealing an assessment dated May 31, 2002. It appointed a representative, and was signed by Constantine Harris as “owner/manager.”
Page 20 of Exhibit 1 was attached to the notice of objection. It sets out the objector’s dispute.
Mr. Gerkes referred to page 37 of Exhibit 1, a retail sales tax return for the period July 1, 2004 to December 31, 2004 from Wispers Restaurant Sports indicating a total due of $1,695. It was signed by C. Harris. Page 39 of Exhibit 1 was a retail sales tax return for the period January 1, 2005 to June 30, 2005 for Wispers signed by C. Harris indicating $754.26 was payable. Both returns were filed without payment, Mr. Gerkes said.
Mr. Gerkes indicated that page 57 of Exhibit 1 was a cheque payable to the Minister of Finance for $14,000, drawn on a bank account of Constantine A. Harris and Nyder Fearon. Similarly, cheques, being pages 58 to 72, inclusive, were drawn on the same account.
Mr. Gerkes referred to page 145 of Exhibit 1, being a letter signed by Nyder Fearon to the Ministry of Finance bearing a fax date of May 28, 2009. It was signed by N. Fearon, and in the text, indicating she owned the Licensee, and had no knowledge of a letter indicating she owed sales tax for the period December 31, 2001 through June 2007 as she only started business activities on March 15, 2009.
Mr. Gerkes said the Ministry of Revenue believes there is an association between Ms Fearon and Constantine Harris. Through information and documents, the Ministry of Revenue believes Constantine Harris is, and has been, the owner of the business at Wispers.
Mr. Gerkes also stated that the Ministry believes Ms Fearon has shown she is not financially responsible to control the remittance of retail sales tax and make returns when due.
In answer to questions on cross-examination, Mr. Gerkes said pages 57 to 72 of Exhibit 1 were cheques, all paid to the Minister of Finance, all signed by Constantine Harris from a joint account of his with Ms Fearon. There is an association between the two regarding the business.
Mr. Gerkes stated that the usage of the joint bank account is the only link between Ms Fearon and 117.
Detective Constable (“D.C.”) Rebecca Gibbons gave evidence. She is currently working with Toronto Police Service’s sex crime units. She has been a police officer since May 2000.
From February 2001 until March 2009, D.C. Gibbons was working in 12 Division where the establishment is located. She said she has been involved with Captain Wispers at the premises.
She made notes regarding liquor incidents at the premises. On consent, D.C. Gibbons was allowed to refer to her notes to refresh her memory.
D.C. Gibbons said the establishment was busy. If police attended for an incident, patrons would leave in an orderly fashion. She said the owner and manager of Wispers was Constantine Harris. She had never met Selvin or Horace Harris. She did not recognize the person sitting beside Ms Fearon at the hearing, namely, Trevor Harris.
D.C. Gibbons said she attended the premises on February 2, 2007 at 11:29 p.m. for a liquor licence check. A licence was given to D.C. Gibbons that night, but when she checked on February 6, 2007, the establishment had no licence issued. She noted infractions the night she was there.
D.C. Gibbons re-attended the premises on February 14, 2007. When she was there on February 2, 2007, she saw flyers for a Valentine’s Day special on February 14 – a Night of Love and Happiness.
On February 2, 2007, D.C. Gibbons said she saw patrons consuming. The premises were being run by Constantine Harris on February 14, 2007. D.C. Gibbons said she saw alcohol being sold by Constantine Harris. Mr. Harris was charged.
D.C. Gibbons stated that Constantine Harris was convicted for unlawfully selling liquor on February 14, 2007 and was fined $200. The February 2, 2007 charges were withdrawn but D/C Gibbons did not know why.
In answer to questions on cross-examination, D.C. Gibbons said the charges against the establishment were provincial offences, and were laid against both Constantine Harris and the licensee company. The convictions were against both.
Christopher Merritt was called to give evidence. He is a police constable (“P.C.”) with 12 Division of the Toronto Police Services. He has been a P.C. for eight years. He has had prior dealings with the establishment starting in 2003.
P.C. Merritt said that page 179 of Exhibit 1 is his will-say statement.
Between 2007 and April 2009, P.C. Merritt was in the community response unit. That unit enforced the LLA. During that period, he was at the premises more frequently to conduct inspections.
P.C. Merritt said he understood Constantine Harris was the owner. He was always present and said he was the owner. P.C. Merritt stated he had never met Selvin Harris, Horace Harris, Trevor Harris, nor Ms Fearon.
P.C. Merritt stated that on February 17, 2005 he was a responder to a call at Wispers. There was a shooting in the establishment. As he entered, many people were leaving. Based on an investigation and from the surveillance system, one gang member shot at another, but in fact shot himself in the leg. P.C. Merritt dealt with Constantine Harris in the bar who said he was the owner and operator of the bar.
P.C. Merritt also attended the premises in the early morning of July 2, 2006, well after 2:00 a.m. A party was going on inside. He was investigating a group outside the rear of the premises when he heard gun shots at the front and people running.
P.C. Merritt observed a male lying on the ground who succumbed. A second male was shot in the chest. This had happened outside as the two males were waiting in a line-up for entry to the premises. Constantine Harris was inside and said he was the owner.
P.C. Merritt referred to several pages in Exhibit 1:
(a) page 44 – this is a case prepared by Detective Neville of 12 Division. It is a case involving the LLA and an inspection carried out at 3:32 a.m. on February 12, 2005. The on-duty manager at that time was Constantine Harris;
(b) page 94 – these are handwritten notes from an officer of 12 Division who attended the premises on February 14, 2007. The officer indicated the owner was Constantine Harris, who was present;
(c) page 121 – this is a report from a radio call at 4:41 a.m. on July 12, 2008. Gun shots had been heard. Police interviewed several people on scene including the owner, Constantine Harris;
(d) page 128 – as part of the same report, there is information about a surveillance system for the premises. It indicated the writer of the report spoke to the owner, Constantine Harris, who gave details about the system and made a copy of the tape for the police;
(e) page 129 – also in the same report, the writer indicates on July 18, 2008, police spoke with the owner, Constantine Harris, regarding the surveillance video;
(f) page 130 – again from the same report, the writer indicates on August 16, 2008 at about 5:00 a.m., he went to the premises and there he was approached by Constantine Harris, the owner/operator;
(g) page 164 – this report was prepared by P.C. Merritt himself, being a violation of the LLA by the Licensee of failing to remove signs of service at 4:09 a.m. on November 8, 2009.
P.C. Merritt said that charges were laid January 20, 2010 against the Licensee, Constantine Harris and Nyder Fearon, which are currently before the courts. On that date, Constantine Harris was in the premises. Ms Fearon was not.
In answers to questions on cross-examination, P.C. Merritt said he was aware Constantine Harris resides in the building housing the premises, but he was not aware Constantine Harris owned the building.
Constantine Harris used the expressions “my bar” and “my place” when referring to Wispers. He gave the impression that he was the owner and manager. He is always there.
P.C. Merritt stated he had no direct involvement in the reports of other police officers except where he is mentioned.
Clive Foley was called to give evidence. Inspector (“Insp.”) Foley has been an inspector with the AGCO since February 1998, and before that he served with the Gaming Control Commission. In 2004 and 2005, Insp. Foley said he attended Wispers at 325 Weston Road in Toronto. He has notes from two such occasions.
On June 6, 2004, Insp. Foley said he was at the premises to assist Toronto Police Services. A liquor licence inspection was carried out. Mr. Constantine Harris was running the place. Insp. Foley had not met him before. Mr. Harris told Insp. Foley he was the manager and part owner.
Insp. Foley said he knew who the licensees of record were and Constantine Harris was not one. Constantine Harris told him his ownership percentage was 70% and that he shared in the profits of the business. The remaining 30% was divided between Selvin and Horace Harris. A change of ownership to Constantine Harris occurred a few months before. Constantine Harris said that his brother Selvin was an owner and a son, Horace, was the other person involved.
Insp. Foley said he asked additional questions in that the Registrar has the right to know who owns an establishment. Constantine Harris told Insp. Foley he had only talked three months ago but has nothing on paper. Earlier he had said he only shared in the profits a little bit. Now he said he was strictly a manager.
Insp. Foley asked Mr. Harris who has operational and financial control. Constantine Harris said Selvin and Horace Harris do. Insp. Foley cautioned Constantine Harris not to obstruct him in that the story had changed. Insp. Foley asked him to be truthful. Mr. Harris stuck to the second account, namely that he was only a manager.
Insp. Foley made further enquiries. He asked Constantine Harris who paid the bills, for the lease, water, hydro, salaries, inventory, taxes, telephone? Insp. Foley asked if a forensic audit were to be conducted, what would be found? Constantine Harris responded that he was paying the bills. He did not say he was being reimbursed.
Insp. Foley concluded that Constantine Harris was at least a part owner of the business. He told Mr. Harris to immediately notify the Registrar and tell him. Mr. Harris would have to be added as an owner. Constantine Harris agreed to do so.
Insp. Foley went to the premises on January 5, 2005 at 10:05 p.m. Nothing had been done to transfer the Licence. Constantine Harris was there.
Insp. Foley asked Mr. Harris if he had rectified the ownership issues. Mr. Harris asked why. He said his brother and brother’s son are the owners, Constantine Harris is the manager. He said he paid most of the bills but he had been paid back. Constantine Harris said he was no longer in financial and operational control. There was no need to follow up with the Registrar because Mr. Harris did not consider himself the owner.
Helen Giorgoudakis was called to give evidence. She has been an AGCO inspector since February 27, 2008. She is familiar with the establishment and has been the area inspector since July 2008. She had notes to which, on consent, she was allowed to refer to refresh her memory.
Insp. Giorgoudakis referred to a report from an inspection of the premises on May 2, 2008 at page 119 of Exhibit 1. She attended with AGCO inspector Higuera. Their purpose was to see if a public notice placard was properly posted.
Insp. Giorgoudakis said there was no placard posted, and when they tried to gain entry, the door was locked. A man unlocked it and told the inspector he was the landlord. It was Constantine Harris. Insp. Giorgoudakis told him to post the placard.
Insp. Giorgoudakis said the establishment was located in a strip plaza. She described the inside of the premises. She said there was a residence above the kitchen and which one got into through the kitchen or the back of the premises.
Insp. Giorgoudakis said that three males arrived at the front door where the inspectors were standing. Insp. Higuera told them no alcohol was being served. Another male got out of a taxi and went inside. Another car arrived and a male and a female arrived. This occurred after 2:30 a.m. The inspectors left the front door at 2:53 a.m.
On February 27, 2009, at 8:14 p.m., Insp. Giorgoudakis attended with AGCO inspector Hall and an Ontario Provincial Police (“OPP”) constable. Constantine Harris was present, gave a driver’s licence indicating he resided at 325 Weston Road. Another male was present in the premises during construction.
Alcohol was found in the premises inside a storage closet. Constantine Harris had keys and opened the closet. He explained that the alcohol was left over from a party the previous week.
Insp. Giorgoudakis advised Mr. Harris to remove all alcohol from the premises prior to its opening for business. Mr. Harris said someone else was running the establishment.
Insp. Giorgoudakis explained that renovations were being made as the establishment did not have a liquor licence at that time. Constantine Harris was told to contact the inspector prior to opening so she could review his responsibilities with him. He agreed to do so.
On July 17, 2009 at 1:09 a.m., Insp. Giorgoudakis attended the premises with Insp. Hall. They conducted a general walk-through. Patrons were observed. A liquor licence had been obtained. Constantine Harris was present. No infractions were found. Ms Fearon was not present. The inspectors departed the premises at 1:15 a.m.
Insp. Giorgoudakis was also at the establishment on July 25, 2009 at 2:04 a.m. with Toronto Police Services. A walk-through was conducted. She observed Constantine Harris on the east side of the room. Patrons were on the west side. Ms Fearon was also present, working behind the service bar on the west side. Insp. Giorgoudakis assumed Ms Fearon was the owner as her name is listed as the licence holder. No infractions were found and the inspector left at 2:16 a.m.
Insp. Giorgoudakis referred to page 164 of Exhibit 1. It was a report that led to charges against the Licensee. The witness attended the premises at 4:09 a.m. on November 8, 2009. She attended with AGCO Inspector Sookdeo.
The inspectors conducted a walk-through. There was loud noise in the rear of the premises. Eight patrons were there plus a disc-jockey. The latter had a cup containing an amber liquid. A female on one side had a clear plastic cup containing a red liquid. A male at the rear had a full cup of dark liquid with foam on top, like a Guinness beer. There were other cups and signs of service observed. Constantine Harris was present. Insp. Giorgoudakis told him about the infractions. Ms Fearon was not present. The inspectors left at 4:21 a.m.
Michael Schlorff gave evidence. He is an OPP constable currently working in Orillia. Previously he was in the OPP unit attached to the AGCO.
Constable (“Const.”) Schlorff made a report on December 16, 2008 of his investigation into the liquor licence application made by Ms Fearon. He took over the file on his arrival at the OPP’s AGCO unit in November 2008. The application had already been submitted.
On December 15, 2008, Const. Schlorff interviewed Ms Fearon. She said she worked at the Toronto School Board dealing with special needs children. Her income from this was about $40,000 per annum. She had no other sources of income, but as indicated in his report (pages 134 to 138 of Exhibit 1) on page 137 of Exhibit 1, Ms Fearon said she had lines of credit.
Ms Fearon told the witness she came interested in the establishment. She had gone to hotel management college and had worked at a Four Points Hotel. She had received information she could purchase the establishment. She spoke to the owner, Constantine Harris, who was looking for a tenant to take over the establishment. Ms Fearon described Mr. Harris as the landlord.
Ms Fearon told Const. Schlorff there was never a purchase agreement, as she was going to lease the premises. Const. Schlorff said his impression was that the relationship between Ms Fearon and Mr. Harris was professional and that Mr. Harris was somewhat removed from the business.
Ms Fearon told Const. Schlorff that she had an agreement to buy the bar and kitchen equipment for $8,000 and that she would pay monthly rent of $1,500. At that point, she had not paid anything as it was conditional upon her getting her liquor licence. She said she would use a line of credit to finance the business.
Const. Schlorff asked Ms Fearon about recent incidents at the premises around the time of her licence application. One incident took place on April 22 and the shooting had occurred in July. Ms Fearon stated that this was the first time she had heard about the incidents she also stated that she did not have a key nor was she permitted access to the premises, but she could access for inspections.
Ms Fearon told Const. Schlorff that she would be the owner and that she would be looking for a cook. She would run the establishment herself in the evenings and on weekends, and she would be keeping her job at the Toronto School Board.
Kimberley Cheeseman gave evidence. Const. Cheeseman is a constable with the OPP, now based in Burlington. She has been a police officer for 13 years. From February 2007 until November 2009, she was with the OPP unit attached to the AGCO. She investigated the liquor licence application submitted by Ms Fearon.
Const. Cheeseman referred to page 12 of Exhibit 1 being an inspection report for 117 dated December 19, 1997 showing there was a party for high school students. Receipt of the report was signed by Constantine Harris for the then licensee.
The witness referred to page 21 of Exhibit 1 being another inspection report at the premises. The inspection occurred on October 22, 2002. Receipt of the report was acknowledged by Constantine Harris.
Const. Cheeseman referred to page 22 of Exhibit 1, being a compliance assessment of a liquor inspection on December 12, 2002. It was signed by Constantine Harrris showing his title as manager.
Const. Cheeseman next referred to page 139 of Exhibit 1 which is a copy of the liquor sales licence issued to the Licensee by the AGCO dated February 6, 2009.
Const. Cheeseman said that a complaint was made to the AGCO through customer service on February 9 2009. An email message was sent to her indicating the complaint was information from Selvin Harris, a brother of Constantine Harris. Selvin Harris said that he did his brother a favour and applied for a liquor licence because Constantine Harris could not obtain a licence himself.
The complaint went on that a letter had been received from the Ministry of Finance that there was unpaid sales tax of $23,545 owing. Selvin Harris indicated he never worked at the establishment – Wispers – and he only did this to help his brother, and Constantine Harris now has someone else to apply for a liquor licence. Selvin Harris wanted to speak to someone at the AGCO about this, but he did not want to speak to the police about it, citing concerns for his safety. Selvin Harris had operated the establishment from December 1996 to January 2007.
Const. Cheeseman said Constantine did not have any criminal convictions. He did have charges before the courts leading up to December 1996 dealing with firearms and assaults. All were dealt with Toronto Police Services and Peel Regional Police.
Const. Cheeseman said an application at the AGCO by Constantine Harris for a liquor licence would have been problematic.
At the time of the complaint, Const. Cheeseman said the AGCO investigation had just been completed by Const. Schlorff. Const. Cheeseman brought herself up to speed on the file. She saw that there was no purchase agreement, Constantine was the landlord, and that Ms Fearon was to pay $8,000 for the equipment in the premises and $1,500 per month as rent.
Const. Cheeseman said she could not find proof that any payment had been made, and she questioned the relationship between Ms Fearon and Constantine Harris – was the former acting as a front for the latter?
In an interview on December 15, 2008, Ms Fearon had said she would be the sole owner but she did not intend to operate the business. On her personal history report dated April 22, 2008, Ms Fearon had indicated she would operate the business.
Const. Cheeseman said because of the inconsistencies, she investigated further. On February 27, 2009, she attended the establishment with two AGCO inspectors. The premises appeared closed, but the front door was open. Renovations were going on in the licensed area. The place appeared to be in construction mode. Four males were inside.
Const. Cheeseman identified herself. Two younger males left. Two older males stayed. Constantine Harris identified himself using an Ontario driver’s licence as the owner, clarifying that to mean the owner of the building. He said that the place would be closed for two more weeks and that Ms Fearon would be taking over at that time. The other male was evasive, refusing to state his role. He was identified as W.G. through his driver’s licence.
One of the AGCO inspectors looked around the establishment. He went upstairs and reported that it looked as though someone was living there.
On March 4, 2009, Const. Cheeseman contacted Ms Fearon to tell her about the investigation into her application for a licence at Captain Wispers. Ms Fearon said she was not yet in control nor did she have any access to the premises despite already having the Licence.
When asked by the witness why she did not yet have access, Ms Fearon told her that although she signed a lease agreement in 2007, the understanding with Constantine Harris was that no monies would be exchanged until she had a liquor licence. Now that she had the Licence, Ms Fearon had no response. Const. Cheeseman explained to Ms Fearon that she needed to be in exclusive control of the premises and she would be responsible for any violations.
Ms Fearon told Const. Cheeseman that she would be making the lease payments and would get access keys. Const. Cheeseman told Ms Fearon she wanted a copy of the purchase agreement by March 9, 2009.
Const. Cheeseman also asked Ms Fearon if Constantine Harris would be taking any active role in the business. Ms Fearon said that Mr. Harris had a flair for Jamaican food, and as such, she wanted to keep him on as a cook. Const. Cheeseman formed the opinion that Ms Fearon was the licensee and that Constantine Harris was the landlord, and had no affiliation with the business.
Const. Cheeseman referred to page 140 of Exhibit 1, saying it was a copy of a cheque for $1,500 dated March 13, 2009 to Constantine Harris. She had requested this. However, Const. Cheeseman said she had never seen the purchase agreement despite asking for it several times.
Const. Cheeseman again insisted on seeing a purchase agreement in a conversation with Ms Fearon on April 1, 2009.
Const. Cheeseman also asked Ms Fearon how she obtained the $8,000 to purchase the business. At this point Const. Cheeseman said Ms Fearon changed her thought process. Ms Fearon told her she would not be paying a lump sum but instead would give Constantine Harris profits of the business to pay off the $8,000. This was a verbal agreement.
Later, on July 8, 2009, Ms Fearon told Const. Cheeseman there would not be a purchase agreement. She would only be leasing the premises. Ultimately, Const. Cheeseman did receive a copy of a lease dated November 1, 2007. It is at pages 101 and 102 of Exhibit 1. Const. Cheeseman pointed out that there is nothing in the document that says it is conditional upon Ms Fearon obtaining a liquor licence.
On March 19, 2009, Const. Cheeseman reactivated the file at the AGCO. Const. Cheeseman spoke to the Ministry of Finance to get clarification for an entry put on the AGCO database. This was within a month after the liquor licence had been issued to Ms Fearon. The Ministry of Finance had concerns about the relationship between licensees at the premises.
Const. Cheeseman made a new report – pages 154 to 159 of Exhibit 1. On June 9, 2009, Const. Cheeseman asked for a copy of the lease. On July 7, 2009, Const. Cheeseman met with a Ministry of Revenue official. She was informed of cheques signed by Constantine Harris on a joint account with Ms Fearon at the Bank of Nova Scotia between August 2, 2005 and April 1, 2007. The Ministry was seeking repayment of outstanding sales tax from Ms Fearon. They do not consider Ms Fearon to be financially responsible in the conduct of business.
Const. Cheeseman went to the Bank of Nova Scotia branch on which the cheques were drawn. The account was a joint account on which either Ms Fearon or Constantine Harris could sign. The account had been opened on June 21, 2002 and was closed on July 29, 2008.
Const. Cheeseman called Ms Fearon to tell her about the meeting with the Ministry of Finance and what she found at the Bank of Nova Scotia. Ms Fearon, when asked, did not have a copy of the purchase agreement but insisted one did exist. Ms Fearon told Const. Cheeseman she had no affiliation with Selvin Harris, nor did she have any relationship with Constantine Harris.
Const. Cheeseman asked Ms Fearon why she had the joint account. Her answer was she had no involvement with Mr. Harris, but she had known him for over 20 years.
Const. Cheeseman referred to a letter from Ms Fearon to the AGCO received May 7, 2008 (page 120 of Exhibit 1). Ms Fearon said she had no relationship or affiliation with 117, Selvin or Horace Harris or 1736311, a previous applicant. This followed a letter to Ms Fearon from the AGCO requesting this information (pages 117 and 118 of Exhibit 1).
Const. Cheeseman referred to the second paragraph on page 158 of Exhibit 1. In the second paragraph on that page, Const. Cheeseman received a phone call on July 8, 2009 from Ms Fearon who indicated that there is no purchase agreement, and she only leases the equipment and chattels.
On July 9, 2009, Ms Fearon and Constantine Harris signed a letter to the AGCO (page 153 of Exhibit 1). The letter indicated why the business relationship changed. There was now a verbal agreement to purchase, but the lease remained the same as before.
Const. Cheeseman asked Ms Fearon what her relationship was with Constantine Harris. She admitted she had a relationship with him, but not the nature of it.
Const. Cheeseman said a lot of things had changed from Const. Schlorff’s investigation to her investigation. The honesty and integrity of Ms Fearon as a licensee was in issue. Const. Cheeseman said she could not get to the bottom of these issues.
Licensee’s Evidence
Robert Maxwell gave evidence. Mr. Maxwell is an accountant. A client of his referred Ms Fearon to him.
Mr. Maxwell works on financial information for Ms Fearon. He had no involvement with Constantine Harris. He prepares financial documents for Captain Wispers. On March 8, 2009 he set up books and records for it.
Mr. Maxwell said he and Ms Fearon discussed something about a purchase. He understood she would be renting a space and equipment to operate the business.
In answer to questions on cross-examination, Mr. Maxwell said he is an accountant with his own firm. His client was not Constantine Harris. He was no other information about him or about Ms Fearon.
The referral of Ms Fearon to him came shortly before March 8, 2009. He was not aware of any investment by Ms Fearon at that time.
Regarding the outstanding retail sales tax, Ms Fearon asked him what she should do about it. Mr. Maxwell told her to write to the Ministry. He knows nothing about the predecessor in the business.
Mr. Maxwell became aware of her investment in the business later. His role is only to prepare financial statements based on information provided to him.
Mr. Maxwell said he is aware of retail sales tax filing requirements. He is also aware that Ms Fearon has not filed any returns. He understands that.
Mr. Maxwell has met with Ms Fearon four or five times. She has a very small business. He has also met the cook once, but he forgets his name. Mr. Maxwell was at the premises around April 2009.
Ms Fearon asked the cook to explain the cash register. The business was not open for the serving of liquor. He does not know who operates the business.
Mr. Maxwell receives cash tapes, spreadsheets showing the purchase of goods for the business, lease documents, copies of correspondence. He collected some documents from Ms Fearon once, but usually he receives them in the mail.
Mr. Maxwell said no financial statements for a year end for the corporate Licence have yet been prepared. He would not certify them. He said that sales tax should not be the liability of a purchaser of a business unless the seller takes that liability.
Mr. Maxwell said he explained that the business just started to operate and was told “get it to us when you get it”. That was in a conversation he had with someone from the Ministry in August 2009. From then to now, nothing has been filed or paid. He said it is partly his fault for not answering requests quickly. There was no discussion regarding a previous debt.
Mr. Maxwell said the business was leasing chattels. There was discussion of a purchase and sale agreement. Ms Fearon was talking to a lawyer. Mr. Maxwell does not know if a purchase and sale agreement exists. He did not get such an agreement in March 2009. He recalled having seen a document relating to chattels.
Trevor Harris gave evidence. Mr. Harris stated that Constantine Harris is his brother. Selvin Harris is the father of Horace Harris. Horace is therefore the witness’ nephew. Selvin Harris is also a brother of the witness.
Mr. Harris stated that Selvin Harris did not front for Constantine Harris. Ms Fearon does not front for him either.
Mr. Harris asked why did Selvin Harris say what he did to Ms Shamon of the AGCO in February, 2009? Constantine Harris’ wife’s sister died leaving money to Constantine Harris and his wife. Selvin owed money to the Canada Revenue Agency. He wanted to have some money from Constantine Harris who refused. That’s how it all started.
Trevor Harris said that in the summer of 1995 he saw a for rent sign for the premises. He knew that Selvin Harris and his son Horace wanted to open a bar. He called them and told them to go to see the space. They did so and Selvin Harris rented it.
Selvin Harris wanted to have a restaurant there too. He arranged for his brother Constantine to cook. Constantine Harris had been a good cook for his family.
The bar and restaurant opened in 1996. In 1998 Constantine Harris wanted to return to Jamaica. Selvin Harris business went down. The witness went to Jamaica in 1999 to talk to Constantine who returned to Canada and became the chef again at Selvin Harris’ business. The place was always full when Constantine was there.
The relationship between Selvin and Constantine soured. Constantine says he is the owner so that they would get a lot of customers.
Selvin Harris was in debt so he did not pay tax. He owed a lot of money, including the landlord. He never caught up paying taxes. Selvin did not sell the bar/restaurant to Constantine because he did not want to take on Selvin Harris’ taxes owing. Constantine did not pay the taxes because he did not owe them.
In answer to questions on cross-examination, Trevor Harris said that Constantine is 61, Selvin is 54, and Horace is 39. Selvin and Horace were electricians in 1996. Horace used to have a bar “back home” from 1993.
Trevor Harris said that Ms Fearon does not have a relationship with Constantine Harris.
The witness stated that Selvin and Horace Harris never ran the business. They never collected money or sold liquor. When Constantine Harris was away, they did.
Trevor Harris said that most of the time, it is Constantine Harris running the business. Ms Fearon works weekends when Constantine Harris is not there. Constantine Harris is there cooking and managing the premises.
The witness said that Constantine told him Ms Fearon would take over the business. Both of them told the witness that Ms Fearon owns the business.
In answer to questions on re-direct, Trevor Harris said his mother told him Ms Fearon owns the business. She is hardly there during the week, but on weekends Ms Fearon is there. Ms Fearon closes the bar at 2:00, so she leaves after 2 a.m.
In 1999, the plan was that Constantine Harris would get part of the business.
Nyder Fearon gave evidence. The Board told her if she did so, Registrar’s counsel could cross-examine her. She said she understood that.
Ms Fearon said she has entered into the business as honestly as she can. She did not have information on the previous sales tax. That has come to her attention just recently. She works very hard. There are a lot of implications to the business, some of which she does not understand.
Regarding the equipment, Ms Fearon said she did not know whether she should purchase it or rent it. She thought the lawyer would draw up papers.
Ms Fearon said the Licence took over two years to obtain. She had to change arrangements. She did not purchase chattels. She did not purchase the business. She opened the business for herself to run it in the premises that existed using equipment that was there.
Ms Fearon stated that in March 2009, she was informed she owed $24,000 or $25,000 of retail sales tax. She wrote a letter to the tax office. She asked them how could she owe that amount when she had just been issued a licence? She and Constantine Harris had a verbal agreement. She paid no money while not conducting business. Ms Fearon said:
“I did not know how the business was being run. I had taken on a business in trouble. I was not the owner of it. It turned on to me.”
Ms Fearon said she answered every single question asked of her. She gave records to Const. Cheeseman who did not believe the information because of the allegation of Selvin Harris. Selvin and Constantine Harris had business dealings. Now they are not working together.
Ms Fearon stated it was not right for the AGCO to be used as an instrument of spite in a quarrel between two brothers. She is in the middle of all this.
Ms Fearon said she has answered questions over and over. She feels harassed. Her integrity is questioned. People come in and leave. Police show up at the premises and people leave.
The witness stated that from 1995 to 2007, there was no reference to her but yet it is her responsibility. The problem is between the brothers.
In answer to questions on cross-examination, Ms Fearon said that Constantine Harris is the owner of the building and a friend. She was never his girlfriend. She had a joint personal account with a friend. He asked for it because he goes out of town a lot and may need cash.
Ms Fearon was asked to look at the cheques on the joint accounts between 2005 and 2007 (pages 57 to 72 of Exhibit 1). She said she became aware of them when Const. Cheeseman asked her about them.
Ms Fearon said she works from 9:15 a.m. to 4:15 p.m. as an early education teacher, Monday to Friday. She does not work at the establishment during the week. In 2005, 2006 and 2007, she made $35,000 to $40,000.
Ms Fearon stated that it was mostly Constantine Harris’ money in the joint account. When asked if he was using his money to pay retail sales tax for a company he did not own, Ms Fearon replied yes.
The witness said that Constantine Harris was not managing the premises. Also in answer to a question, she stated that Constantine Harris was not at the hearing because he has more important things to do.
Ms Fearon said before 2009, she occasionally visited the premises, but she did not see much of Selvin Harris. She did not know who owned the bar between 1999 and 2007.
Shown the lease document dated November 1, 2007 (page 151 of Exhibit 1), she said she was not aware the date of the lease was after the time that the Licence had been surrendered. Paragraph 5 of the lease said that $3,000 was paid. Ms Fearon said it was never paid.
Ms Fearon stated the lease was conditional on her obtaining a liquor licence. She said she had an oral agreement with Constantine Harris. This was all new to her. She had never done a lease before.
Ms Fearon agreed that the lease (page 101 of Exhibit 1), was in her personal name. There was no condition regarding a liquor licence. The irrevocable paragraph – 8 – was not filled in. She said she signed it as did Constantine Harris.
Ms Fearon said that her numbered company was incorporated on February 13, 2008. She paid for it out of her line of credit. She said she was not aware that sales tax was paid out of the joint account for 117.
Ms Fearon was asked to look at part of Const. Schlorff’s report – page 136 of Exhibit 1. On page 137 of Exhibit 1, she said she heard the establishment was for sale from a friend. She refused to identify the friend.
In Const. Cheeseman’s report (page 142 of Exhibit 1), it indicated the two spoke on March 4, 2009. The Licence had been issued on February 6, 2009. At that point, the witness did not have a key for or access to the premises. Ms Fearon said the place was not ready to be opened. She did write a rent cheque.
Ms Fearon said a bar was built. She wanted it closed in. Renovations were being done at her request. She did not know how much the renovations cost, although she said the cost was roughly $3,000. There are no documents about the renovations. She would write a cheque to herself and pay cash for the renovations.
Ms Fearon said that Constantine Harris was directing the renovations. She did not have keys nor did she have access to the premises without calling him.
Ms Fearon said on March 9, 2009, she told Const. Cheeseman she would get the purchase agreement. She found out after she did not have one. She had thought Constantine Harris’ lawyer had one as he had prepared the lease agreement. The lawyer was M.F.
Ms Fearon was referred to a letter to the AGCO dated July 9, 2009 signed by both herself and Constantine Harris. It said there had been a change in the deal. The $8,000 was no longer to be paid.
Ms Fearon said her application for a liquor licence was submitted in 2007. There was a delay. She did not know if she would get a licence.
In answer to questions from the Board, Ms Fearon said she worked as a night auditor and hotel manager for seven years at two hotels in the Toronto area. For 10 years before that, she worked at the Bank of Montreal first as a teller and then in customer service.
As a night auditor, she compiled data from the front office and kitchen, and would input that data. She did day to day balancing, and prepared information for the accountants. She had also overseen the night shift at one of the hotels.
Ms Fearon said that prior to 2009 she had never run a bar. She had never served liquor. She did take out liquor from storage for a banquet, and would return it to storage afterwards.
At the completion of Ms Fearon’s evidence, the parties were asked to provide written submissions to the Board as to findings.
Registrar’s Submissions
- Mr. Morris for the Registrar wrote that findings for the Registrar should be made for the following breaches of the LLA:
(a) 6(2)(d),(e) and (f) – by the Licensee, obtaining the Licence under false pretences. Ms Fearon’s ownership is a sham as Constantine Harris is and always has been the owner of the business; and
(b) 6(2)(a) – by the Licensee, failing to file sales tax returns and remit tax to the Ministry of Revenue as required by the Retail Sales Tax Act since she obtained the Licence in February 2009.
Mr. Morris stated that 117 held the liquor licence number 805196 from 1996 until 2007 when it was surrendered. 117 owes $26,905.66 in sales tax, interest and penalties (Exhibit 2). Selvin Harris and Horace Harris, brother and nephew to Constantine Harris, respectively, were principals of 117 but they were not the true owners.
Mr. Morris stated that Selvin Harris told AGCO customer service that he had applied for the liquor licence because Constantine Harris could not get one. In 1996, at the time of the original application, Constantine was facing serious criminal charges. Selvin’s application falsely stated that he would be managing the premises (page 9 of Exhibit 1), but he was never seen doing so by a police officer or AGCO inspector.
Mr. Morris continued. In 1997, Constantine Harris was managing the premises at the time of AGCO Inspector Saldarriaga’s inspection (page 12 of Exhibit 1). Constantine Harris attended as the owner at meetings with the Ministry of Revenue auditor in 2002 to deal with the period of 1998 to 2001 (pages 13 to 18 of Exhibit 1). He said he prepared the returns since 1999 and had also been operating the business since then. Trevor Harris, in his evidence, admitted that, since at least 1999, Constantine Harris was running the business, not Selvin or Horace Harris.
Constantine Harris filed the sales tax notice of objection in 2002 signing it as “owner/manager” (pages 19 to 21 of Exhibit 1). He was present as manager during an AGCO inspection in 2002 (page 22 of Exhibit 1) In 2004, when asked by Inspector Foley how many shares of 117 he owned and when he had purchased them, and whether he shared in the profits, Constantine Harris was evasive but admitted he paid all the bills.
In 2005, Constantine Harris claimed he had been reimbursed, but he filed a transfer application (pages 42 to 43 and 54 to 55 of Exhibit 1). At the same time he was filing retail sales tax returns (pages 37 to 40 of Exhibit 1), managing the premises (pages 44 to 46 of Exhibit 1), and sending cheques to the Ministry of Revenue to pay off a debt of a corporation he ostensibly did not own out of his personal bank account (pages 57 to 72 of Exhibit 1). Mr. Morris said that the only reason Constantine Harris’ transfer application did not go through was because there was outstanding retail sales tax owing by 117.
Constables Merritt and Givens both testified that they never dealt with any of Horace, Selvin or Trevor Harris. They only dealt with Constantine Harris and did so on numerous occasions, some involving significant events, throughout the last decade. Constantine Harris pleaded guilty to unlawfully keeping and offering liquor for sale without a license in the establishment after the Licence was surrendered. Mr. Morris asks - why would a landlord be selling liquor all of a sudden?
Mr. Morris pointed out that Constantine Harris admitted in 2008 to operating a bar and restaurant at this location previously (page 116 of Exhibit 1).
Mr. Morris wrote that the evidence is clear that Constantine Harris was the true owner of the business throughout the period prior to Nyder Fearon’s application for a liquor licence.
Nyder Fearon obtained a liquor licence in 2009. She told Const. Schlorff that she heard about the opportunity from a friend, and that Constantine Harris told her he was looking for a tenant. She also told Const. Schlorff that she had an agreement to purchase the bar and equipment for $8,000, and to lease the Premises for $1,500 per month conditional on her obtaining a liquor licence. She presented herself as being in a professional landlord-tenant relationship with Constantine Harris.
Mr. Morris stated that Ms Fearon said she was the owner, would be running the business evenings and weekends, and was financing the business out of a line of credit. Indeed, wrote Mr. Morris, the only reason for the liquor licence investigation of her application was two incidents that occurred in 2008 when the establishment was not licensed.
Mr. Morris wrote that none of what Ms. Fearon said was true. Const. Merritt testified that Constantine Harris presented himself as owner and operator from 2005 to January 2010. He was always there and he never identified himself as just a cook or employee. In 2008, Constantine Harris had control over providing video surveillance during a gun shots investigation. On January 20, 2010, Constantine Harris was present when charges were laid for the November 8, 2009 incident. In fact, Constantine Harris was personally charged.
AGCO Inspector Giorgoudakis testified that on February 27, 2009, after the Licence was issued, Constantine Harris was in the premises doing renovations. He had a key to the liquor storage. He was present again on July 17, 2009 at 1:09 a.m., July 25, 2009 at 2:04 a.m. and on November 8, 2009 at 4:09 a.m. (when patrons were consuming liquor.) All of the inspector’s dealings were with Constantine Harris. She only saw Ms Fearon working in the premises once – on July 25, 2009.
Mr. Morris wrote that the evidence is clear. Constantine Harris’ position never changed – he was the owner-operator under the old licence, when there was no licence, and under the present licence.
Ms Fearon’s conduct confirms this. She told Const. Schlorff that her purchase was conditional on obtaining the liquor licence. She implied her relationship with Constantine Harris was professional. Yet she admitted that the retail sales tax payments made by Constantine Harris were made from their joint account. She gave no explanation for why this happened, merely stating it was not her money. She told Const. Cheeseman that she had lots of accounts like that. She denied being Constantine Harris’ girlfriend but refused to answer the simple question as to who told her the business was available.
Mr. Morris continued that Ms Fearon did not have access to the business even after the Licence was issued. Ms Fearon only paid the rent because Const. Cheeseman told her to do so if she was the real licensee (page 140 of Exhibit 1). Ms Fearon did not supervise the renovations. She admitted the lease made no mention of who paid for the renovations, nor did it mention a condition regarding the obtaining of a liquor licence (page 101-2 of Exhibit 1).
Ms Fearon delayed providing a purchase agreement and then had to admit one did not exist. She did say one existed in April 2009 when the licence had already been issued, so clearly her arrangement could not have been changed because of any delay in issuing the Licence.
Mr. Morris wrote that Nyder Fearon is not the true owner and operator of the establishment. Her whole application was a sham. She had never run a bar or sold liquor prior to her application. Given her joint bank account and her willingness to participate in a sham, her statement that she had no affiliation with the previous licensee was false (page 120 of Exhibit 1), as was her letter to the Ministry in May 2008 purporting to have no knowledge of the previous business because she had just started operations (page 145 of Exhibit 1), and also as was her letter of July 2009 to the AGCO pretending to have revisited the original purchase agreement because of delays in processing the licence application (page 153 of Exhibit 1).
Mr. Morris stated that Ms Fearon is a full-time Toronto Board of Education employee who occasionally may work behind the bar in the premises on weekends.
Regarding the current retail sales tax debt, Ms Fearon received the Licence in February 2009. A year has passed and she had not filed a single return or remitted a single dollar of retail sales tax to the Ministry. The Licensee owes an estimated $11,657.61 in retail sales tax. Even if that amount is less, Ms Fearon has shown complete disregard for her obligation to file returns on time with payment. On this basis alone, she has breached clause 6(2)(a) of the LLA.
Licensee’s Submissions
Ms Fearon wrote in her submissions that she did not obtain the Licence under false pretences, and denied her ownership was a sham. She expressed no knowledge about Constantine Harris being the owner in the past. In any event, he is not the owner since she obtained the Licence on February 6, 2009. Ms Fearon stated that she is the sole owner of the Licensee carrying on business as Captain Wispers Restaurant & Sports Bar.
Having started a new business, Ms Fearon stated it took a little while to get the operation set up and working. She asked her accountant for help with the sales tax return. He is very busy and did not get back to her in a timely manner which caused further delay. There was no intention to avoid paying tax. Under the Retail Sales Tax Act, interest and penalties are levied on outstanding amounts, which she is sure will be levied against her. Therefore it is unfair for the Registrar to seek to penalize her on retail sales tax matters.
Ms Fearon said she has paid taxes to the Ministry of Revenue of $182.21 based on figures given to her by Mr. Maxwell, her accountant that represents the tax payable for the period March 2009 to August 2009. She estimates the tax payable for the period September 2009 to February 2010 to be $301.00, and said it will be paid to the Ministry of Revenue as soon as she gets the individual amounts.
Before her application, Ms Fearon wrote she should not be judged on past actions. She states: “It is not right for the AGCO to be used as an instrument of spite in one brother’s quarrels with another”. She quotes Mr. Morris in one of his submissions that it is clear Constantine Harris was the true owner of the business throughout the period prior to her making her application.
On making her application, Ms Fearon stated that she does not deny any of her statements to Const. Schlorff as that was her intention and that is what some discussions with Constantine Harris were about. After paying for the different licences, almost $1,600 for the AGCO placard, the lengthy waiting period to get the Licence, the additional lawyer’s fees it would cost and the economic meltdown, Ms Fearon said she changed her mind about purchasing the equipment for $8,000. Constantine Harris agreed.
Ms Fearon wrote even if she and Mr. Harris had a written contract, she would have the right to withdraw from it. There was no reason to change the lease agreement. She had a legitimate landlord-tenant relationship with Constantine Harris and he is a friend.
Ms Fearon said she was disturbed that she is being penalized and harassed for something she had nothing to do with. The reason she had to wait two years to get her licence is, as Mr. Morris submitted, two incidents that occurred in 2008 when the place was unlicensed. Ms Fearon said her integrity is being questioned over and over again. Const. Schlorff investigated Ms Fearon’s financial records and personal life and found nothing questionable. The Licence was issued.
Ms Fearon wrote there is nothing to support the Registrar’s allegations that Constantine Harris presented himself as owner between February 2009 and January 2010, as she was the owner during that period. She hired Constantine Harris to be the cook as Const. Cheeseman testified. He is in the place all the time because he owns the property and works for Ms Fearon, and it is a public place. As for video surveillance, Ms Fearon stated it is on the property and it would be a violation if Mr. Harris did not provide it as evidence in an investigation.
Regarding the incident of November 8, 2009, she does not know anything about any infraction against Constantine Harris, Captain Wispers or herself. She only became aware of them in the hearing documents.
Inspector Giorgoudakis testified that on February 27, 2009, Constantine Harris was present during renovations. He was. Ms Fearon explained to the inspector that she did not yet have the keys. But she had access to the building though Constantine Harris whenever she needed it. Ms Fearon was not aware she had to open for business the very day she got the Licence. Inspector Giorgoudakis explained she had to open, so Ms Fearon got the keys and paid the rent.
Ms Fearon wrote that it is clear Inspector Giorgoudakis and Const. Merritt erroneously accepted and expected Constantine Harris was the owner as when they entered the establishment, they by-passed Ms Fearon and went directly looking for him. He was not working, but was at the back of the restaurant playing games with some other patrons. Inspector Giorgoudakis asked Ms Fearon for identification and when produced, realized she was the owner.
Ms Fearon wrote that she did answer his questions and those of Const. Cheeseman truthfully. Mr. Constantine Harris is a friend. Ms Fearon has known him for 10 years. She had said a friend told her about the business being available. She maintains she has the right to not disclose the name of that person. Regarding the cheques to pay retail sales tax, she explained that the account was under both our names and anyone could write the cheques without the other’s knowledge or consent.
Ms Fearon stated she did not make any false statement to Const. Schlorff that her agreement was verbal and conditional on receipt of the liquor licence. She did not delay providing a purchase agreement because there was none. Nothing was purchased.
Ms Fearon wrote she is the true owner and operator of the establishment as of March 2009. Her application was not a sham. There is no evidence to support this. Just because she never ran a bar before does not mean she is prohibited from applying for a liquor licence and running an establishment. She has had her SmartServe certificate since 1997. The allegation of affiliating her with the previous business is false. Ms Fearon stated that she is a hardworking honest person who provided all information requested. That was evaluated and Ms Fearon was deemed worthy of getting the Licence.
Ms Fearon said that Selvin Harris, as previous owner, owing money on retail sales tax, wants to shift his debt to her. He stated his accusations on February 9, 2009, three days after the Licence was issued (page 10 of Exhibit 1). That was even before Ms Fearon physically received the Licence. She commented how could she know that the Licence had been approved when he made his call to the AGCO.
Const. Cheeseman testified that the AGCO received a phone call from Selvin Harris stating he acted as a front for his brother between December 1996 and January 2007 when he voluntarily surrendered the liquor Licence (pages 141 to 142 of Exhibit 1). As a result of this, Const. Cheeseman entered into a new investigation. Ms Fearon stated she was not given the opportunity to establish her business before she was harassed financially. Ms Fearon said she is not a front and a sham.
Ms Fearon concluded her submissions by stating that she started the business in good faith but as a result of constant harassment, the business has not yet flourished. She is still not profitable, the revenue is low, the retail sales tax is low, and she need more time to make the business profitable.
Registrar’s Reply
In Reply, Mr. Morris stated that Ms Fearon gave no valid explanation why she failed to file returns for a year. Any payments of tax were made after the hearing was over as none were referred to having been made during the hearing.
Const. Schlorff interviewed Ms Fearon on December 15, 2008. The Licence was issued on February 6, 2009. Const Cheeseman asked for the purchase agreement on March 9, 2009. On April 1, 2009, Ms Fearon told Const. Cheeseman how she would fund the purchase as she told Const. Schlorff. Clearly there was no renegotiation of the purchase agreement due to the delay in the issuance of the Licence.
Mr. Morris wrote that the police documents show the charges for November 8, 2009 were served. Ms Fearon and the Licensee were co-accused along with Constantine Harris. If Ms Fearon knows nothing about the charges, it shows she is not the true owner.
How could Constantine Harris write cheques on the joint account with Ms Fearon without her knowing it? The explanation she gave to Const. Cheeseman was that she has lots of accounts with people that she does not personally use.
Ms Fearon obtained the Licence in February 2009 because she misled Const. Schlorff as to the true ownership of the business.
Reasons for Decision
- In the NOP, the Registrar proposes to revoke the Licence pursuant to one (or more) of the following:
(a) Clause 6(2)(a) of the LLA having regard to its financial position, the licence holder cannot reasonably be expected to be financial responsible in the conduct of its business; or
(b) Clause 6(2)(d) of the LLA, the present/past conduct of the licence holder, or its officers or directors, or of a shareholder who owns or controls 10% or more of its equity shares, or of a person having beneficial interest in the business of the licence holder, or of a person having responsibility for the management or operation of the business of the licence holder affords reasonable grounds for belief that its business will not be carried on in accordance with the law and with intergrity and honestly; or
(c) Clause 6(2)(e) of the LLA, the licensee provided false information to the Board; or
(d) Clause 6(2)(f) of the LLA, the licence holder is carrying on activities that are in contravention of the LLA or regulations.
Each will be discussed in turn.
Clause 6(2)(a) of the LLA
- The allegation rests on either of two basis:
(a) The Licensee has failed to file any retail sales tax returns and has not paid any retail sales tax from the date of its licence to the date of the NOP; or
(b) The Licensee is a front for Constantine Harris, as was 117, a previous licensee in the same premises. 117 owes a substantial amount of sales tax, interest and penalty.
At the hearing, Mr. Gerkes of the Ontario Ministry of Revenue, referring to Exhibit 2, testified that 117 owes a total of $26,905.66 of sales tax, interest and penalties. He also testified that as of the time he was giving his evidence, the Licensee had not filed any returns nor made any payments of sales tax. Returns were due on the 23^rd^ day of the month after the reporting period, and any tax owing paid on filing the return.
Mr. Maxwell, the Licensee’s accountant, testified at the hearing he was aware that Ms Fearon had not filed any sales tax returns. He said he advised her to write to the Ministry. He also said in a conversation he had with an unidentified person from the Ministry in August 2009, he was told “get it (the return) to us when you get it”. The Board finds this statement to be implausible and does not accept that such conversation took place, particularly as it allegedly took place, approximately six months after the Licence was issued.
In giving her evidence, Ms Fearon did not mention retail sales tax returns or money owing or paid by the Licensee.
The Board accepts the unrefuted evidence that the Licensee did not from the date of issue of the Licence file a sales tax return nor pay any tax owing up to the date of the hearing. The Board is aware that in her submissions, Ms Fearon wrote that $182.21 of retail sales taxes had been paid for the period March 2009 to August 2009, but there was absolutely no evidence or testimony about this presented at the hearing.
In order for the Registrar to prove that the sales tax debt of 117 has become a sales tax debt of the Licensee, he would have to establish on a balance of probabilities that the sales tax debt is that of the same person, or that by operation of law, the debt became that of the Licensee.
While Mr. Morris raised the argument that Constantine Harris was behind each of 117 and the Licensee, or put another way, both companies were or are a front for Constantine Harris, the sales tax debt is that of separate corporations as the holder of the liquor licence.
There was no evidence presented at the hearing or argument made in the submissions that by operation of law or otherwise, the Licensee was responsible for the sales tax debt of 117.
No evidence was presented about the financial position of the Licensee. Mr. Maxwell testified that while he is the accountant for the Licensee, no financial statements have yet to be prepared.
In his AGCO investigation report of December 16, 2008, Const. Schlorff recorded that at an interview he had with Ms Fearon on December 15, 2008, she told him about her financial position including two largely unused lines of credit (pages 136 to 137 of Exhibit 1). Const. Schlorff raised no questions about these lines of credit.
Although the Licensee in Exhibit 2 is shown to owe a balance of $11,657.61 of retail sales tax, interest and penalties, these are all based on estimates by the Ministry. While it is true that the Licensee did not file any returns up to the date of the hearing, the Board finds that this deficiency in action in and of itself for the specified time frame is insufficient to make a finding under clause 6(2)(a) of the LLA.
The Registrar has failed to prove that, having regard to its financial position, the licence holder cannot reasonably be expected to be financially responsible in the conduct of its business.
Therefore, the Board MAKES NO FINDING under clause 6(2)(a) of the LLA.
Clause (6)(2)(d) of the LLA
The Registrar’s allegation is that Constantine Harris has responsibility for the management and operation of the business of the Licensee, and his present/past conduct affords reasonable grounds for belief that the business will not be carried on in accordance with the law and with integrity and honesty.
Ms Fearon categorically denies that and states that she owns the business, and is the owner and operator of it.
The evidence, much of it hearsay, is overwhelming that Constantine Harris was at least one of the owners and the operator of 117.
Mr. Gerkes referred to page 150 of Exhibit 1, being a schedule to a request for a hearing to the AGCO from the Ministry of Revenue. Under the heading “Vendor History” the following is written:
“…Director Selvin Harris claims he obtained liquor licence under the corporation (1174265 Ontario Inc.) for his brother Constantine Harris to operate. The Ministry’s records indicate that cheques and returns were signed by Constantine Harris and Nyder Fearon (Constantine’s girlfriend)…”
Mr. Gerkes also referred to pages 15 to 18 of Exhibit 1. It is a typed version of his interview notes from an interview with Constantine Harris on February 20, 2002 pertaining to Whispers Restaurant Sports Bar, Unit 6C, 325 Weston Road, Toronto. There are audit notes of the Ministry of Revenue. On the top of page 18, shown as being present is Mr. Constantine Harris, Owner. Close to the top of page 17, the following is stated: “Mr. Harris claims that he started to operate the restaurant during 1999. Prior to that his brother was operating the restaurant.” Further down the page, the following is found: “Yes, Mr. C. Harris was preparing RST Returns since 1999.” On page 17, it is stated that a tour of the premises took place and that “Constantine Harris, owner “was there.”
Mr. Gerkes also referred to page 19 of Exhibit 1 being a Notice of Objection filed by Wispers Restaurant Sports Bar and Social Club respecting an assessment of retail sales tax. The Notice was dated May 31, 2002 and was signed by Constantine Harris as “owner/manager.” Page 20 of Exhibit 1 was attached to the Notice setting out the reasons for the objection.
Mr. Gerkes referred to pages 37 and 39 of Exhibit 1. Both were retail sales tax returns, the former for the period July 1 to December 31, 2005, both for Wispers Restaurant Sports. Both were signed by “C. Harris.”
Next Mr. Gerkes referred to copies of cheques found at pages 57 to 72 of Exhibit 1. All of the cheques were drawn on the same bank account, all payable to the Minister of Finance, and all with respect to retail sales tax for Wispers. The cheques start on August 2, 2005 and go up to April 1, 2007. They are drawn on the joint account of Constantine A. Harris and Nyder Fearon, and are all signed by C. Harris.
D.C. Gibbons testified that she attended the premises on February 2, 2007. She saw patrons consuming. This date was after 117’s surrender of the Licence (which occurred on January 23, 2007 (page 56 of Exhibit 1) and before the Licence was issued to the Licensee on February 6, 2009.
D.C. Gibbons said that on February 2, 2007, the premises were being run by Constantine Harris. Patrons were consuming. Also, D.C. Gibbons was in the premises on February 14, 2007, and she saw alcohol being sold by Constantine Harris who was charged for unlawfully selling liquor, convicted and fined $200.00.
P.C. Merritt testified that he has dealt with the establishment as a police officer since 2003 up to April 2009. He understood Constantine Harris was the owner. Mr. Harris was always present and said he was the owner. P.C. Merritt stated he had never met Selvin Harris, Horace Harris, Trevor Harris or Nyder Fearon.
P.C. Merritt testified about a shooting in the premises on February 17, 2005 which is also referred to in his will-say statement (page 179 of Exhibit 1). In his statement, P.C. Merritt states that from February 17, 2005 forward, he attended Wispers on many occasions “always finding Constantine Harris at the bar, always running the bar, and always advising that it is his establishment.”
P.C. Merritt also referred to several different pages of Exhibit 1, all notes or reports from Toronto Police Services about various attendances at the premises, and all indicating Constantine Harris was always in the premises as the owner. These incidents occurred on February 14, 2007, July 12, 2008, July 18, 2008, August 16, 2008 and November 8, 2009. The latter four incidents occurred after 117 had voluntarily surrendered its liquor licence on January 23, 2007.
Insp. Foley testified that he was at the premises on June 6, 2004. Constantine Harris was running the place and told Insp. Foley he was the manager and part owner. The two men had not met before. Constantine Harris told Insp. Foley his ownership percentage was 70% and that he shared in the profits of the business. The remaining 30% ownership was divided between Selvin and Horace Harris.
Constantine Harris told Insp. Foley that ownership of the then Licensee, 117, had changed a short time ago. He changed that story to the parties had talked about it three months before, but there is nothing on paper. While Constantine Harris said that Selvin and Horace Harris had operational control of the business of 117, Constantine Harris admitted that he was paying all the bills. Mr. Harris was told by Insp. Foley to get in touch with the AGCO to have himself added as an owner.
Nothing had been done, so Insp. Foley returned to the premises on January 5, 2005. When Insp. Foley asked Mr. Harris why no paperwork had been submitted to the AGCO, Constantine Harris replied that his brother and his brother’s son are the owners, and he is the manager. He had paid most of the bills but he was reimbursed. Constantine Harris said he was no longer in financial and operational control.
Insp. Giorgoudakis testified about an inspection on May 2, 2008 at 2:30 a.m. Her report is found at page 129 of Exhibit 1. A number of people entered the premises. Constantine Harris was inside the premises, unlocked the door, and told Insp. Giorgoudakis he was the landlord.
On February 27, 2009 at 8:14 p.m., Insp. Giorgoudakis again attended the premises. The Licence had been issued to the Licensee on February 6, 2009. Constantine Harris was in the premises. Construction was taking place. Alcohol was found in a storage closet. Constantine Harris had keys for it. He explained that the alcohol was left over from a party the previous week.
The Board accepts all of the above evidence as being objective, and credible, as it was generally unrefuted. It points to a consistent picture, namely that Constantine Harris was at least one of the owners, as well as the operator and manager of Wispers while the liquor licence was issued to 117.
Supporting this conclusion is the evidence of Const. Cheeseman. She referred to a complaint made to the AGCO on February 9, 2009 by Selvin Harris who told the AGCO that he did his brother Constantine a favour and applied for a liquor licence because Constantine Harris could not obtain a licence himself. This complaint was spurred by the fact that Selvin Harris had received a letter that there was some $23,545 in retail sales tax owing by 117 and possibly its principals. Selvin Harris told the AGCO he never worked at Whispers, and that Constantine Harris now has someone else to apply for a liquor licence.
The application for a licence by the Licensee was received by the AGCO on April 23, 2008 (page 111 of Exhibit 1). Nyder Fearon was shown as the contact person, and to be the President, Director and 100% equity shareholder of the Licensee. The premises were stated to be “no change from previous licence”, which was unit 6C, 325 Weston Road, Toronto. Ms Fearon indicated she would manage the establishment on a day to day basis. No one else was mentioned as a manager (Box C on page 114 of Exhibit 1). Ms Fearon signed the application on April 22, 2008.
Const. Schlorff testified he made a report dated December 16, 2008 of his investigation into this application. He had taken over the file in November 2008 on his arrival at the AGCO. His report is found at pages 134 to 138 of Exhibit 1.
As part of his investigation, Const. Schlorff interviewed Ms Fearon on December 15, 2008. Her finances were discussed. Ms Fearon said she had an agreement with Constantine Harris, the landlord of the premises, to purchase the bar and kitchen equipment for $8,000 and pay $1,500 per month as rent, conditional upon her obtaining a liquor licence.
Const. Schlorff made the following conclusion in his report:
“The investigation has determined that FEARON is the applicant and although she has entered into an agreement to lease the premise she currently does not have control of the premise until she is successful in obtaining the liquor licence. Her only access to the establishment with exception is in the presence of the landlord, for the purpose of inspections relating to the business. FEARON will be the sole owner of Captain Whispers Restaurant and Sports Bar. FEARON is employed on full-time basis and does not intend to operate the business during the day; she intends to open in the evening and on weekends.”
Based ostensibly on Const. Schlorff’s report, the Licence was issued to the Licensee on February 6, 2009 (page 139 of Exhibit 1).
Three days later on February 9, 2009, the AGCO received the complaint from Selvin Harris.
Const. Cheeseman opened an investigation resulting in her report dated April 9, 2009 (pages 141 to 144 of Exhibit 1).
Const. Cheeseman testified that she could not find any proof that any payment had been made by Ms Fearon or the Licensee. She also immediately questioned whether Ms Fearon was in fact fronting for Constantine Harris. In her interview with Const. Schlorff on December 15, 2008, Ms Fearon said she would be the sole owner of the Licensee but she did not intend to operate the business. Yet on her personal history report dated April 22, 2008, Const. Cheeseman testified Ms Fearon indicated she would operate the business. She had said that also on the application for a liquor licence (page 114 of Exhibit 1).
On February 27, 2009, Const. Cheeseman attended the premises with two AGCO inspectors. The premises appeared closed but the front door was open. The place was undergoing construction. Constantine Harris and a couple of other men were inside. He told Const. Cheeseman that the place would be closed for two more weeks and Ms Fearon would be taking over at that time.
Const. Cheeseman contacted Ms Fearon on March 4, 2009. Ms Fearon stated she was not yet in control nor did she have any access to the premises other than through Constantine Harris who had the keys.
Ms Fearon stated to Const. Cheeseman that her lease agreement with Constantine Harris was based on the understanding that no payments would be made until she had a liquor licence. Now that she had the Licence, she had no comment for Const. Cheeseman as to why no payment was made.
Const. Cheeseman, despite several requests to Ms Fearon, never received a copy of a purchase agreement. She did receive a copy of a cheque for $1,500 dated March 13, 2009 payable to Constantine Harris.
In a conversation with Ms Fearon on April 1, 2009, Ms Fearon told Const. Cheeseman she now would not be paying $8,000 outright, but “would be deferring profits earned to Harris (Constantine) until the $8,000 is paid off.” This was a verbal agreement between the two of them.
As the result of concerns that the Ministry of Revenue had concerning the relationships between licensees at the establishment, Const. Cheeseman made a new report (pages 154 to 159 of Exhibit 1).
Const. Cheeseman met with an official from the Ministry of Revenue on July 7, 2009. She was told about cheques signed by Constantine Harris on a joint account with Ms Fearon at the Bank of Nova Scotia between August 2, 2005 and April 1, 2007 paying sales tax owing by 117.
The Ministry was seeking repayment of outstanding sales tax of 117 from Ms Fearon. The cheques referred to are on pages 57 to 72 of Exhibit 1. Const. Cheeseman went to the Bank of Nova Scotia and found out that the account on which the above cheques had been drawn was a joint account on which either Ms Fearon or Constantine Harris could sign. The account had been opened on June 21, 2002 and closed on July 29, 2008.
When asked why she had the joint account with Constantine Harris by Const. Cheeseman, Ms Fearon was evasive. When asked about the purchase agreement for the business, Ms Fearon insisted one existed but did not give a copy to Const. Cheeseman.
On July 8, 2009, Ms Fearon called Const. Cheeseman to advise her that after consultation with Constantine Harris and a lawyer, no purchase agreement existed and that she only leases the premises which includes the equipment and chattels.
At a meeting with Ms Fearon, Const. Cheeseman in her report (page 158 of Exhibit 1) indicated Ms Fearon’s reluctance to answer questions, and ultimately becoming argumentative and defensive.
The conclusion of Const. Cheeseman’s report is insightful (page 159 of Exhibit 1):
“FEARON applied for and was granted a liquor licence on the principle that a basic lease and purchase agreement would be entered into once she was issued a liquor licence. Once issued, FEARON now indicates that there is no purchase agreement. FEARON had not begun to pay rent or take control of her establishment until prompted by the investigator. The landlord, Constantine HARRIS, had complete control of the establishment. A yellow flag has been re-instated on the file, due to information that FEARON had previous dealings with the establishment when under control by the previous licensee. The Ministry of Revenue is questioning if FEARON has the financial responsibility to operate the business.
The above information leads the investigator to believe that a previous affiliation/relationship existed between FEARON and both the previous licensee and the current landlord, Constantine HARRIS. FEARON was co-operative through the initial investigation, however, became defensive when pressed for further information concerning specific details about this previous relationship(s) and her involvement. Misinformation has been provided throughout this investigation, through vagueness and/or omission, thereby questioning the nature of FEARON’S honesty and integrity, the very principle by which she was granted a liquor licence.”
Dating back to June 21, 2002, the date on which the joint bank account was opened at the Bank of Nova Scotia, Ms Fearon and Constantine Harris had a relationship. Ms Fearon in her evidence gave no explanation. According to her, she had no knowledge Constantine Harris was writing cheques on their joint account. Yet, she expressed no anger or surprise.
Ms Fearon had no experience running a bar or operating a business involving the sale of alcohol except for the time when she took wine out for an event at a Four Points hotel, and put it back at the end of the evening.
Her business arrangement to buy the establishment from Constantine Harris was loose, and changed over time. It was mainly verbal. The Board believes that being told by the Ministry of Revenue she was responsible for the retail sales tax owing by 117 was the underlying reason for the alleged changing of the nature of the purchase of the business and its assets.
Ms Fearon has a full time job with the Toronto School Board. She intends to keep that job. However in filing her application to the AGCO, she indicated only she would operate and manage the bar, no one else. In her testimony at the hearing, Ms Fearon said there are a lot of implications of running the business, some of which she does not understand. She also said she does not work at the establishment during the week.
Perhaps Ms Fearon was naïve in believing she could run the business, but based on the evidence of the Registrar’s witnesses, Constantine Harris was and is a large presence at the establishment, is always there and did in the past and still continues to tell people he is the owner and/or manager.
The evidence points to a conclusion that Ms Fearon has a large amount of help in running the establishment, that the help is coming from Constantine Harris, and as he continues to tell people, he is the in fact true owner and manager of the premises. While the Licensee may be a numbered company of which Ms Fearon is the only officer, director and shareholder, all evidence points to Constantine Harris as being the de facto owner and operator of the premises.
Constantine Harris has been charged with offences for events which occurred on February 2, 2007 and on February 14, 2007. He was convicted on the latter; the former were withdrawn. Further charges were laid against him, the Licensee and Ms Fearon on January 20, 2010 for failing to remove signs of service in the premises at 4:09 a.m. on November 8, 2009. These charges are before the courts.
There have been shootings in the premises (February 17, 2005), at the front of the premises (July 2, 2006), and frequent attendance by the police. On all of these occasions, Constantine Harris has been present in the establishment and told police, in almost all cases, that he is the owner.
The Board concludes therefore that Constantine Harris has a beneficial interest in the business, and also has responsibility for the management and operation of the business. Either or both cases affords reasonable grounds for belief that the business will not be carried on in accordance with the law and with integrity and honesty.
The Board notes that Constantine Harris was not at the hearing, nor was he called by the Licensee to give evidence to explain what role he has played at the premises. Ms Fearon explained his absence as he having more important things to do. The Board finds this explanation to be unacceptable give his obviously significant role in the business and draws a negative inference from the non-appearance of Constantine Harris to present evidence at the hearing.
In view of the above, the Board makes a FINDING that the Licensee has breached clause 6(2)(d) of the LLA.
Clause (6)(2)(e) of the LLA
Having reached the conclusion about the involvement of Constantine Harris in the establishment in its finding that clause 6(2)(d) has been breached, all one has to do is look at the Licensee’s application for a liquor licence (pages 111 to 115 of Exhibit 1) where there is no mention of Constantine Harris as an owner and manager of the Licensee.
The alleged ever shifting nature of the business arrangement between Ms Fearon and Constantine Harris leads to the conclusion that he was involved as an owner of the Licensee. First, Ms Fearon was to purchase the chattels and equipment for $8,000 and lease the premises from Constantine Harris for $1,500 per month. Then the purchase part of the agreement was deleted. Then Ms Fearon was to pay Constantine Harris $8,000 out of profits. The only document which confirms the arrangement was a lease dated November 1, 2007 (pages 101 to 102 of Exhibit 1) which called for monthly payments of $1,500, with a deposit of $3,000 to be paid.
The deposit was never paid. Ms Fearon said the lease was conditional upon her obtaining a liquor licence, but the lease does not provide for this.
None of these changes were communicated to the AGCO by Ms Fearon. Instead they came out in interviews held at the initiation of OPP officers working for the AGCO and conducting investigations.
All the time, Ms Fearon was misleading the AGCO into believing she was purchasing the business, which she did not do.
Based on the above, Ms Fearon made false statements and provided false information regarding her application for a liquor licence for the Licensee.
As a result, Ms Fearon and the Licensee have BREACHED clause 6(2)(e) of the LLA.
Clause (6)(2)(f) of the LLA
- Having made findings of breaches of both clauses 6(2)(d) and 6(2)(e) of the LLA by the Licensee, the Board does not need to consider whether or not a breach occurred under clause (6)(2)(f) of the LLA or any other allegations contained in the NOP.
Reasons for Revocation
The preamble to subsection (6)(2) of the LLA reads: “Subject to (not applicable here)…, an applicant is entitled to be issued a licence to sell liquor except if” and there follows eight exceptions.
The Board has determined in this decision that the Licensee has breached two of the eight exceptions, namely clauses 6(2)(d) and 6(2)(e).
Accordingly, the Licensee is not entitled to a liquor licence and since the licence has been issued to the Licensee on February 6, 2009, it has to be revoked.
Conclusion
- Therefore, liquor licence number 805196 issued to 1761097 Ontario Ltd., operating as CAPTAIN WISPERS RESTAURANT & SPORTS BAR, 325 Weston Road, Unit 6C, Toronto, Ontario, M6N 4Z9, is hereby REVOKED, effective immediately.
DATED AT TORONTO THIS 19^th^ DAY OF May , 2010
DAVID C. GAVSIE, CHAIR, AGCO ALLAN HIGDON, BOARD MEMBER