ALCOHOL AND GAMING COMMISSION OF ONTARIO
IN THE MATTER OF The: Liquor Licence Act, R.S.O. 1990, c. L.19, as amended
BETWEEN:
Registrar, Alcohol and Gaming Commission of Ontario (Registrar)
-and-
1122175 Ontario Limited operating as Old Barn Tavern (Licensee)
DECISION ON FINDINGS
Panel: David C. Gavsie, Chair, AGCO Patricia McQuaid, Vice-Chair, AGCO
Decision Date: May 12, 2010 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 Fax: (416) 326-5566 Toll Free In Ontario: 1-800-522-2876 Website: www.agco.on.ca
Appearances Registrar, Alcohol and Gaming Commission: Richard Kulis, Representative 112175 Ontario Limited, Licensee: Patrick Little, Representative
Authorities 1213963 Ontario Ltd. (c.o.b. Sin City Bar and Eatery) v. Ontario (Alcohol and Gaming Commission), [2009] O.J. No. 1553
Allegations
1A hearing into Notice of Proposal (“NOP”) number 17943 dated March 13, 2010 to revoke a licence and an Order dated March 13, 2010 to immediately suspend on an interim basis liquor licence number 23785 (the “Licence”), issued to 1122175 Ontario Limited (the “Licensee”), operating as OLD BARN TAVERN, 466 Merritt Street, St. Catharines, Ontario, L2P 1P3, (the “establishment” or the “premises”), on the basis of alleged violations of subsection 45(2) and section 45.2 of Ontario Regulation 719/90 (the “O.Reg.”) made pursuant to the Liquor Licence Act (the “LLA”), was held on April 6, 2010, in the City of Niagara Falls.
Decision
2The Board FINDS the Licensee contravened subsection 45(2) and section 45.2 of the O.Reg. Reasons follow.
3On April 8, 2010, the Board issued an Order continuing the Interim Suspension issued by the Registrar on March 13, 2010 placed on the Licence (the “Interim Suspension”), pending conclusion of the hearing or any order of the Board otherwise. The Board hereby continues the Interim Suspension until it orders otherwise.
Preliminary Matters
4At the commencement of the hearing, Mr. Little stated that he would be seeking an adjournment of the hearing of the NOP, pending the outcome of the criminal proceeding involving the Licensee. Mr. Little advised that the next date scheduled for those proceedings is May 22, 2010. In the interim, the Licensee would, in effect, withdraw from the management of the premises; his daughter Maria Sfyras would assume responsibility for management of the establishment.
5Mr. Kulis stated that the Registrar was not agreeable to having Ms Sfyras operate the establishment while ownership remained with Mr. Sfyras. The Board recessed to allow the parties the opportunity to canvas options for operation of the business pending the outcome of the criminal proceedings. At the conclusion of those discussions, Mr. Little advised the Board that he was withdrawing his request for an adjournment and was prepared to proceed with the hearing.
6The Board then ordered the exclusion of witnesses.
Registrar’s Evidence
7The Board heard evidence from three police officers from the Niagara Regional Police Service (“NRPS”), each of whom were involved, in some aspect, with the execution of a search warrant at the licensed premises on March 12, 2010.
8The first of the officers was Police Constable (“P.C.”) Matthew Hodges who explained that he began his investigation regarding the alleged sale of cocaine at the licensed premises in October 2009 as a result of information received through Crime Stoppers and from three separate confidential informants. Two alleged drug traffickers were identified, one by the name of Jimmy the Greek and the second being S.D. In particular, police received information that S.D. was selling cocaine from the licensed premises and storing it on the second level of the premises. P.C. Hodges understood that Jimmy the Greek was the owner of the premises and further, that he was aware of S.D.’s the activities at the bar.
9As a result of the information from the informants regarding purchase of drugs at the bar and the storage and re-packaging of drugs on site, P.C. Hodges attended at the bar on February 19, 2010, in an undercover capacity, for the purpose of making observations. S.D. was present. He first observed S.D. in the bar area. S.D. then entered the kitchen, came out and proceeded to the washroom area after which he went to the foyer of the bar, an area between a set of double doors through which one enters the bar. He saw a male come from the parking lot and enter the foyer at which point there was a 10 to 15 second interaction with S.D. before the male returned to his vehicle.
10S.D. then re-entered the bar and met another male. P.C. Hodges observed a quick hand to hand exchange, which, based on his police experience was consistent with a drug sale.
11The police investigation continued, culminating in the execution of a search warrant at both the bar and S.D.’s residence on March 12, 2010. The NRPS tactical unit was deployed to assist, specifically to ensure compliance of any patrons and to secure exits to the premises. No weapons were drawn during the execution of the search warrant.
12P.C. Hodges and P.C. Howe entered the premises first, at 9:00 p.m. S.D. was present as was Mr. Sfyras who P.C. Hodges believed was referred to as “Jimmy” by patrons. He observed S.D. go into the kitchen area on two occasions. At this point, he signalled for the tactical unit to enter. The premises was secured without incident. P.C. Hodges then attended at S.D.’s residence. No drugs were located there though police did find what they allege to be a “debt list”.
13At 11:03 p.m., P.C. Hodges returned to the Old Barn Tavern to assist with the ongoing search. He himself did not locate any drugs, but he was present when others found what is alleged to be illegal drugs. These include two bags of cocaine, a large piece (approximately 1 ounce) of hashish, a bottle container of oxycodone pills and a large bag containing marijuana. Forensic analysis of these substances have not been received as yet. A large amount of cash ($865.00) was found in a basket behind and under the service bar.
14On cross-examination, P.C. Hodges reiterated that while he never saw Mr. Sfyras involved in any drug trafficking, his information was that Mr. Sfyras was aware that drug trafficking was taking place at his premises. Mr. Sfyras was not there when he attended on February 19, 2010. However, in P.C. Hodges’ view, that drug sale was done openly. From that, he concluded that it would be done no less blatantly when Mr. Sfyras was present. Based on his observations, it seemed unlikely that Mr. Sfyras could not be aware.
15Regarding the alleged drug paraphernalia found on the premises, P.C. Hodges stated that he was present when a tin tray was found on a shelving unit located on the second floor. It was not hidden from view. On the tray were small baggies with suspected cocaine residue. It appeared to be a re-packaging station. The second floor consisted of an office, a storage area for supplies and washrooms which were located at the top of the stairs.
16P.C. Hodges confirmed on cross-examination that S.D. was the only individual named on the search warrant. S.D. does have a prior criminal record, but not for drug offences. It is P.C. Hodges information that S.D. was not an employee though he did observe him go into the kitchen on February 19, 2010.
17Sergeant (“Sgt.”) Paul Blakely attended at the execution of the search warrant on March 12, 2010. Three individuals, Mr. Sfyras, S.D. and another male were arrested by him that night. Mr. Syfras was arrested for possession of a controlled substance. He was read his rights and advised about the search warrant. Sgt Blakely estimated that there were approximately 15 patrons in the premises.
18Sgt. Blakely was involved in the search of the upstairs area, i.e. the office/supply area. In the supply area, he located some property which he believed to be part of a drug trafficking station: a metal tray, a digital scale, small baggies and a spoon with dried cocaine residue. The metal tray was in plain view. On a top shelf, they found a small baggie containing a powder substance, also believed to be cocaine. In a crawlspace, in the vicinity of duct compressors, they found a brown paper bag containing marijuana. In addition, in an ice machine which did not appear to be operating, they found, by removing the front cover, a “chunk” of what is believed to be hashish.
19Sgt Blakely stated that they also found a bag of icing sugar among a supply of paper cups. Police used a “swipe” - an immediate way to detect a drug substance. The contents of the icing sugar did not test positive though the bag itself did. Sgt Blakely attributed this to the fact that icing sugar is often used in trafficking operations as a “cutting agent” for cocaine to make the drug less pure, thereby multiplying the dealer’s profit.
20On cross-examination, Sgt Blakely stated that all the drugs were found on the second floor. He was not aware of any drugs found in the kitchen area. Mr. Sfyras, who identified himself as “Jimmy” was on the main floor when arrested. In terms of the baggies found, some were the sandwich size others were small, at 1 inch by 1 inch size.
21P.C. Maggie Mitchell has worked with the NRPS for four years. She was part of the team which attended for the execution of the search warrant on March 12, 2010. She was designated as an exhibit officer that evening. Her role was to ensure the continuity of evidence. Upon entry, she helped secure the premises. She estimated that there were approximately 10 patrons present.
22She then approached Mr. Sfyras who had been advised of his rights by Sgt. Blakely. Mr. Sfyras stated that he had no legal counsel. She searched him, finding two wallets in his back pockets. There was no cash in either wallet. One contained his identification, driver’s licence, and health card. The other, credit cards, bills and some loose papers on which were written names and phone numbers. These pieces of paper were ultimately returned to Mr. Sfyras. P.C. Mitchell was able to identify two pieces of paper, (Exhibits 1 and 2). Her personal view was that these appeared to be a “debt list.”
23In his front right pocket, he had a roll of bills, approximately $150 in $20 bills. After the search of his person, Mr. Sfyras was turned over to P.C. Taylor who transported him to the police station.
24Following this, P.C. Mitchell went upstairs, passing through the kitchen to go up the stairs to assist in the search for drugs. Sgt. Blakely, at 11:10 p.m., located an aluminium serving tray on one of the shelving units. On the tray, they found some clear plastic baggies, including a box of the same. Using a “tester” (a stick which turns blue if wiped against cocaine substance), they detected residue of suspected cocaine on some of the baggies and on the tray. They also found a “Fuzion” digital scale which in her experience is commonly found on drug searches. Also seized was 17.1 grams of powder cocaine in a baggie.
25At 11:15 p.m., one of the police officers with the canine unit located a large paper bag in the attic area next to the office. This area was accessed by a set of wooden stairs. The bag, about one-half foot in width and one and one-half feet in length contained 26.7 grams of marijuana. At 11:20 p.m., in the ice machine located right beside the doorway from the main level, Sgt. Blakely found a small plastic bag of hash oil. P.C. Mitchell was not present when the ice machine was examined. She did see it, describing it as having two doors which latched. The doors were still on the machine. There was no ice in it. It did not appear to be operating. (For the purposes of clarification, the amounts cited were weighed subsequent to the search, at the police station.)
26At 11:25 p.m., Sgt. Blakely turned over another set of sandwich bags containing suspected cocaine residue. These were found on the top shelf of the unit closest to the office.
27To assist in the description of the second floor, P.C. Mitchell drew, by hand, a diagram of the upstairs of the licenses premises (Exhibit 3). The stairs to the upper floor were accessed in the kitchen. The kitchen itself had typical swing doors by which one gained entry. This area did not appear to be accessible to the patrons. She explained that this area appeared to be the main storage area for the premises. Items such as bags of flour, paper products, dishes, cans and dried goods were stored on the shelving units. Walking past the three rows of shelves (approximately eight feet high) one arrived at the office. There was no door on the office entrance. It contained a desk, computer and filing cabinets as well as decorations which seemed to be stored there. To the left of the office was a ladder by which one gained access to the attic.
28Continuing with the results of the search, P.C. Mitchell stated that she located a bag of what was suspected to be cocaine on the first row of shelves to the left. She saw aluminium trays and then, stuffed in among some cans, she saw the bag which weighed 13 grams. She also found an envelope filled with 13 percocet pills and another (pink) Fuzion scale. At 11:40 p.m., Detective Constable Haley, also of the NRPS, located a white bottle which resembled a vitamin bottle, filled with 92 percocet pills. This was found in an unfinished attic area above the washrooms on the second floor. At 11:52 p.m., another clear plastic bag containing 6.1 grams of suspected cocaine was found on the middle shelving unit to the right.
29Another police officer kept track of any suspected drugs found on the main floor. She was aware that a small bag of marijuana was found among the beer cases in the kitchen.
30On cross-examination, P.C. Mitchell confirmed that upon her entry to the bar, Mr. Sfyras was observed in the main bar area. No drugs were found on his person. She did not believe he was referred to as “Jimmy the Greek.”
31The Registrar’s final witness was Sgt. Renee Serianni, an Ontario Provincial Police (“OPP”) officer seconded to the AGCO. She is the unit commander for the Niagara Falls office; the AGCO inspectors report to her. On March 12, 2010, she was advised by P.C. Hodges that a search warrant would be carried out at the Old Barn Tavern. She has requested of the NRPS that she be invited to participate in such operations that relate to licensed premises in order to determine whether there may be resulting possible infractions of the LLA.
32At 8:30 p.m., she attended the briefing regarding the search warrant. She understood that there had been complaints to the NRPS about drug trafficking at the premises. Sgt. Serianni stated that it was “common knowledge” in her office that drug trafficking was occurring at the premises. From the briefing, she understood that S.D., the object of the investigation, would be at the bar and that police believed they would find drugs on site. Mr. Sfyras was not listed on the search warrant.
33At 9:20 p.m., she arrived at the premises. There were no patrons on the patio and approximately 10 persons inside. It was relatively quiet inside; no music was playing. She maintained observations of the patrons until the premises were secured by police. The bartender, A.L., identified himself to her. He said he had been working there for two to three years and has his Smart Serve certificate. Mr. Sfyras was walking around the main floor area. There were a number of patrons seated at the service bar. One male patron was arrested. Six small plastic baggies, described as “pockets” by Sgt. Serianni, containing a white powder were found on the floor under his seat, in plain view, apparently discarded upon the entry by police. She did see the cash in a plastic box behind the bar. She thought it unusual that it was not kept in the cash register.
34Sgt. Serianni did speak to Mr Sfyras as he was being arrested. She identified herself and told him that if drugs were found, a report would be submitted to the Deputy Registrar. At this, Mr. Sfyras became somewhat upset, yelling: “You show me what bar doesn’t have drugs.” She was advised by P.C. Mitchell that two wallets, in addition to cash in his front pocket, were found on Mr. Sfyras as well as paper that appeared to be a debt list. She herself did not view these items.
35The actual search of the premises began at about 10:05 p.m. She did not conduct a search herself but observed and made notes of the different areas of the licensed premises in which drugs were located. She entered the upper level through the kitchen, taking the stairs to what seemed to be a storage area containing restaurant and bar supplies. She described it as a large space, though cluttered, with shelves on either side of a main aisle which led to an office at the end of the room. There was a doorway into the office but no door. She did not see a door removed. Some of the drugs found were hidden, others were visible such as the tray with the scale. This was in plain view on a shelf. It looked like a packaging station. Sgt. Serianni’s description of areas in which drugs were located was consistent with that of the NRPS officers.
36Regarding her comment that it was “common knowledge” that drug trafficking was occurring at the premises, on cross-examination, Sgt. Serianni stated that the AGCO inspectors told her that was the “word on the street.” They had no evidence to act upon. AGCO inspectors had not attended at the premises for well over a year and made no observations regarding possible drug activity. Sgt. Serianni explained that when she spoke to Mr. Sfyras, he was under arrest so she did not caution him, but showed him her identification, both her OPP and AGCO badges.
37Sgt. Serianni stated that her concern was whether the Licensee and/or employees were present when drug trafficking was occurring and whether they had knowledge of it. Based on his information, P.C. Hodges believed that S.D was dealing drugs in the presence of the owner and that Mr. Sfyras received the drugs for trafficking. She never heard Mr. Sfyras referred to as “Jimmy the Greek.”
38Sgt. Serianni did not speak to S.D., but she did ask A.L. if S.D. was an employee. He said S.D. was not.
39Sgt. Serianni did advise on cross examination that there were beer cases in the hallway off the kitchen though a lot of the liquor was stored in a cabinet in the office upstairs. She could not recall if the door to the cabinet was locked. She was advised that a bottle of percocet pills were found, she thought a bottle of 105 tablets was found in a bottle behind the bar area.
40Regarding the “tip jar”, Sgt. Serianni stated that in her experience one would usually see loonies and toonies in such a jar, which are then pooled among staff. The plastic container held a bundle of a large amount of bills. This is not a big establishment and with one bartender and the owner present, it did not seem likely it was a “tip jar.”
41Sgt. Serianni stated that she did not see Mr. Sfyras deal drugs, but the evidence led her to believe that he ought to have known of the drug trafficking that was occurring on his premises. He was at the premises when drugs were found. A significant quantity was found in the storage areas which were accessed through the kitchen and were areas where only the owner and staff would go. In her view, the area in which the tray, with the scale, baggies, spoon and drugs were found looked like a packaging station and someone would have to be given permission by the Licensee to be there. It seems unlikely, to her, that he was not aware; he ought to have known of the drugs in the premises.
Licensee’s Evidence
42Demetre “Jim” Sfyras is 68 years old and is the sole director and shareholder of Old Barn Tavern which he has operated for 10 years. Prior to this, he operated two different licensed establishments for a total of 11 years. He has his Smart Serve certification.
43At the Old Barn Tavern, there are five employees, including himself. All but him are part time. He is usually there five to six days a week from approximately 7:00 p.m. to close, at about 3:00 a.m.
44S.D. has never been an employee. He has known him since 1989 when S.D. was 16 or 17 years old. At that time, Mr Sfyras would help S.D. and his brother out by giving them food. They lived in an apartment above his bar. S.D. is not working now. In the past, he worked at Stelco. Mr. Sfyras stated that he trusts S.D. From time to time, S.D. has helped out at the bar, by going to the beer store for example. He has never paid him.
45Mr. Sfyras stated that the kitchen is for staff only; the staff washrooms are upstairs, accessible through the kitchen. S.D. would also use the staff washroom. He explained that there is a metal fire door at the stairs in the kitchen to the upper level. It is kept closed, but not locked. There is a small office upstairs where liquor is stored. There is a door in the office which is locked. His daughter has the key. Anyone else would need permission to enter.
46In terms of his bar’s reputation, Mr. Sfyras stated that he did not know that it was said to be a centre for drug activity. Inspectors never mentioned that to him. He was unaware of any complaints to that effect. He has no disciplinary history with the AGCO.
47Mr. Sfyras emphasized that he had no involvement with the sale of drugs from his bar or elsewhere and was unaware of any drug related activity at the bar by S.D. or any employee. He would never consent to someone using his premises for that purpose. He is contesting the criminal charges against him. He pays $6000 per month in rent and cannot afford to keep the business closed.
48Mr. Sfyras described the events of March 12th. He was inside, close to the patio doors, when the police arrived. Police were yelling and screaming, rushing in with a crowbar. He stated: “It looked like a Taliban compound.” He said that police destroyed the ice machine, busted doors and pulled drywall off the walls. He was arrested before police found any drugs. He still does not believe that police could have found drugs there. He had no knowledge about the basket of money found behind the bar stating, “for sure it was not a tip jar”.
49Regarding the two wallets and cash found on his person, Mr. Sfyras explained that he always carries two wallets, one holds his identification, the other his credit cards and a list of relatives with their phone numbers. He then reviewed the slips of paper found in one wallet in some detail (Exhibits 1, 2, 4 and 5). He provided explanation for each, emphasizing that they were not a debt list for drugs. He stated that he always keeps a quantity of cash in his front pocket usually an amount in the range of $115.
50On cross-examination, Mr. Sfyras stated that he recalled being very upset when he spoke to Sgt. Serianni on March 12th. He could not recall his exact words, but probably said something to her when she told him that she would have his licence taken away. He believes he mentioned something about drugs.
51Regarding access to the upstairs, employees could go up anytime. He would go up three to four times per day, for perhaps three to five minutes each time. He might be going up to get liquor from the office or grabbing a promotional t-shirt for someone. He would not announce or report to anyone his intention to go upstairs, rather he would simply go up as needed. He would be surprised if he saw someone else up there.
52When questioned by Mr. Kulis about the drugs that police allege they found on the premises, Mr. Sfyras stated that he did not believe that the drugs were actually there as asserted by the police. He believes that the police planted the drugs there.
Submissions
53Both Mr. Kulis and Mr. Little agreed that their submissions should apply to both Mr. Little’s Motion to lift the Interim Suspension and to the allegations in the NOP itself.
Submissions for the Registrar
54Mr. Kulis on behalf of the Registrar submitted that the Interim Suspension should stay in place until the Board makes its decision on the NOP. The Registrar will be asking for findings and revocation of the licence.
55The evidence was compelling that drug activity actively occurred in the premises. Drugs were found in the establishment, and on the second floor. Some were secreted, but there was no desperate attempt to conceal. There was a wide array. The Licensee should have at least known about the drugs.
56Repackaging of drugs took place on the second floor. That is where police found the paraphernalia. The police did initial testing which indicated drugs.
57The drugs on the second floor were found in an area used by the Licensee several times a day going to and from his office. This area was under the control of the Licensee. He should have known the drugs were there.
58The comfort level of the dealer must have been high. The tray found on the second floor where the drugs were broken down into units for sale shows the dealer’s comfort level,. Drugs were cut, weighed and bagged. The Licensee made numerous trips to the second floor, but had no checks or balances, just the opposite. The Licensee showed wilful blindness to the activity.
59The Licensee said he did not believe there were drugs in the place. He believes the police must have planted everything.
60The Licensee’s version of events, his lack of control and failure to prevent the drug activity all lead to the conclusion that findings should be made under subsection 45(2) and section 45.2 of the O.Reg.
Licensee’s Submissions
61Mr. Little, on behalf of the Licensee, submitted that no findings should be made. The Board should approach this matter with concern when the Registrar is relying on an informant. While S.D. and a person called “Jimmy the Greek” were sellers, Mr. Sfyras is neither of these people.
62The police testified they never saw Mr. Sfyras involved in a drug transaction. Drug selling by him is not in evidence before the Board.
63Mr. Sfyras’ 30 year record in liquor licensed establishments is exemplary – not even a warning.
64Mr. Sfyras had trust in S.D. That trust was abused. For that reason, is it fair to paint Mr. Sfyras with being wilfully blind to what was going on in the storage area?
Reasons and Analysis
65The Board has carefully reviewed the evidence and the submissions of counsel.
66The NOP alleges violations of subsection 45(2) and section 45.2 of the O.Reg. Dealing first with subsection 45(2), the allegation is that the licence holder permitted “a person to hold, offer for sale, sell, distribute or consume a controlled substance as defined in the Controlled Drugs and Substances Act (Canada) on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder.” The Board heard evidence that P.C. Hodges attended the premises on February 19, 2010 as a result of confidential information and observed S.D. conduct what appeared to be a drug transaction. On this occasion, he saw S.D. enter the kitchen then come out from there and make the transaction. Subsequently, a search warrant was executed at the premises on March 12, 2010. Mr. Sfyras was not the target of the investigation though his premises were.
67The Board did not hear any evidence directly implicating Mr. Sfyras in the sale of drugs from his premises. This is clear on the evidence. What the Board did hear was that a significant amount of drugs were found, most in the storage areas. Forensic analysis of the substances has not been received, however, based on the evidence from police officers, the discovery of digital scales, spoons and baggies consistent, in the police view, with trafficking, the Board is prepared to accept, on the balance of probabilities that drugs as defined in the Controlled Drugs and Substances Act were found on the premises.
68In terms of the location in which the drugs were found, the Board finds that they were “…on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder.” Mr. Sfyras described a door at the bottom of the stairs to the upper level, and a door to the office. The police evidence described neither. However, Mr. Sfyras also stated that the door at the stairs, located in the kitchen area, was not locked and the upstairs areas was accessible to staff and S.D. who was not an employee. It was not an area used by the public generally. The staff washrooms are upstairs as are the storage areas for the bar as indicated in the evidence of all of the witnesses.
69P.C. Hodges, in his evidence, recounted on February 19th that he saw S.D. enter the kitchen area, again an area integral to the operation of the establishment. Whether or not there was a locked door to the office is not critical; the fact is that the drugs found were largely in areas on the upper level and much was not concealed from view. Mr. Sfyras would go upstairs several times a day, yet he states he never saw any evidence of drug activity of the type described by police.
70Further, he would be surprised if he saw someone else upstairs supporting the fact that this was an area under his control.
71Subsection 45(2) uses the word “permit”. It does not require the licence holder’s active involvement. The criminal proceedings involve a different standard of proof and as Mr. Little pointed out in submissions, issues about the propriety of the search warrant and credibility concerns related to that may well be raised in that forum. With respect to Mr. Sfyras’ possible involvement, the Board did hear from one police officer, P.C. Mitchell, that the pieces of paper found on Mr. Sfyras suggested, to her, a debt list. Mr. Sfyras provided his explanation for these notations, as well as for his carrying of two wallets and to which Mr. Little referred in submissions. The pieces of paper may well suggest a record of indebtedness but the Board is not prepared to infer that it relates to drug activity nor that Mr. Sfyras’ carrying of two wallets is more than his own method by which he organizes his affairs.
72The Court of Appeal in 1213963 Ontario Ltd. (c.o.b. Sin City Bar and Eatery) v. Ontario (Alcohol and Gaming Commission), [2009] O.J. No. 1553, has held that the word “permit” requires an inquiry as to whether the licensee “knew or ought to have known”. Looking then at the concept of “permit,” Mr. Sfyras states he did not know there was any drug activity going on. In fact, he denies any such activity or the existence of drugs on the premises at all, suggesting that the police “planted” everything found on the premises on March 12, 2010. (Mr. Sfyras also suggested that the police arrived with crowbars that evening. While not minimizing that police arriving with a tactical squad may well have been a startling event for Mr. Sfyras, his description is certainly at odds with that of the police officers who described it as an orderly entry and without incident).
73Even if the Board accepts that Mr. Sfyras did not in fact know of the drug activity, on the evidence the Board can only conclude that he “ought to have known”. S.D. was frequently at the establishment. He may well have been, as Mr. Little suggested in submissions, a trusted friend given, it seems, his ready access to areas otherwise frequented by staff. An abuse of that trust may well have led S.D. to a comfort level such that he set up a re-packaging station, not concealed from view in the storage area, an area where Mr. Sfyras passed through several times a day. Mr. Kulis, in submissions, suggested a wilful blindness. The Board agrees: that trust relationship does appear to have led to a wilful blindness, and a failure to meet the obligation of a licensee to know what activities are occurring within his premises and to ensure that no such activities contravene the law. There is no other probable explanation than that Mr. Sfyras if not aware, chose not to be, ignoring S.D.’s activities both within the bar area and in the storage area. Further, by Mr. Sfyras’ assertions of a police plant of evidence (including perhaps the cash in the basket behind the bar which he stated quite clearly was not a tip jar and seemed perplexed by its existence), the Board can only conclude as well, that his state of wilful blindness continues. The Board therefore, for the above reasons, finds a violation of subsection 45(2) of the O.Reg.
74With respect to section 45.2, the Board also finds that the Licensee violated this section of the O.Reg. Mr. Sfyras failed to maintain control of the activities that were permitted to occur on the premises. The drugs found, together with various paraphernalia described above, on a balance of probabilities, suggest drug activity within the premises and, as the Board found, at best wilful blindness to the same – effectively relinquishing of control over his premises.
Conclusion
75For the above reasons, the Board FINDS the Licensee contravened subsection 45(2) and section 45.2 of the O.Reg.
76On April 8, 2010, the Board issued an Order continuing the Interim Suspension imposed on the Licensee by the Registrar on March 13, 2010 (the “Interim Suspension”), pending conclusion of the hearing or any order of the Board otherwise. The Board hereby continues the Interim Suspension until it orders otherwise.
77The Board invites written submissions on penalty from the respective parties. The Registrar’s representative shall serve and file written submissions within seven (7) days of the date of this decision. The Licensee’s representative shall have seven (7) days to serve and file a written response. The Registrar’s representative may serve and file a reply within three (3) days of the receipt of the Licensee’s response. All submissions are to be filed with the Manager, Hearings Department, Alcohol and Gaming Commission, at the address on the front page of this decision in accordance with the Board’s Rules of Practice.
DATED AT TORONTO THIS 12th DAY OF May, 2010
DAVID C. GAVSIE, CHAIR, AGCO PATRICIA MCQUAID, VICE-CHAIR, AGCO