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-
1550049 Ontario Inc. operating as Shoeless Joe’s Licensee
DECISION
Panel: Alex McCauley, Board Member Bruce S. Miller, Board Member
Decision Date: May 27, 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 1550049 Ontario Inc, Licensee: Anastassios Nanou, On his own behalf and on behalf of the Corporate Licensee
Allegations
1A hearing into a Notice of Proposal (“NOP”) number 17740 dated December 10, 2009 to revoke liquor licence number 806085 (the “licence”), issued to 1550049 Ontario Inc. (the “Licensee”), operating as SHOELESS JOE’S, 12612 Hwy 50, Unit 13, Bolton, Ontario, L7E 1T6, on the basis that the Registrar has reason to believe that the Licensee would be disentitled to a licence under section 6 of the Liquor Licence Act (the “LLA”), was held on April 30, 2010 in the City of Toronto.
Decision
2The Board FINDS that the Licensee would be disentitled to a licence under section 6 of the LLA and REVOKES the liquor licence. Reasons follow.
Preliminary Matters
3Anastassios Nanou is an officer, shareholder and director of the Licensee. He appeared on his own behalf and on behalf of the Corporation. Mr. Nanou waived the right to be represented by a licensed representative.
Registrar’s Evidence
4Marilyn Blazevic is a field investigation officer with the Ontario Ministry of Revenue (the “Ministry”). She had carriage of this file involving Shoeless Joe’s on behalf of the Ministry.
5Ms Blazevic testified that the Ministry and the Licensee have entered into several Memorandums of Understanding (“MOU”) to attempt to recover debt incurred by the Licensee to the Ministry of unpaid sales tax revenues. The first MOU was entered into on March 19, 2008. Exhibit #1 in these proceedings is a copy of the MOU dated September 5, 2008. At that time, there was a debt of $37,526.95 owed to the Ministry. Exhibit #2, entitled “Account Springboard”, dated April 29, 2010 was entered through Ms Blazevic. She testified, and the document indicated, that as of April 29, 2010, there was an outstanding balance remaining of $68,552.31 still owed to the Ministry.
6There were payments indicated in Exhibit #2, but according to Ms Blazevic, activity on the account was sporadic and the debt was increasing with no sign of it ever being satisfied.
7There has been a bank garnishment of $81,000 placed on the account of Mr. Nanou at his bank, the Royal Bank. This was placed in the fall of 2009. $76,506 has been received to date by the Ministry. Without the garnishment, the debt owed to the Ministry would have exceeded $100,000.
8Ms Blazevic testified that some of the cheques submitted by the Licensee to meet some payments were returned NSF.
9Ms Blazevic testified that the MOU of September 5, 2008 has not been complied with.
10Ms Blazevic stated that in her view, this debt will not be satisfied and continues to grow. In her opinion, the liquor licence of this licensed premises should be revoked.
11In cross-examination, Ms Blazevic stated that the Ministry had not yet received an alleged $10,000 payment.
Licensee’s Evidence
12Anastassios (Tom) Nanou is the Licensee of record. He stated that the demand (garnishee) on his account was put there at his request. He further stated that $76,506.07 of the $81,148.87 demand has been paid.
13Mr. Nanou stated that his problems arose from economic hardships, primarily as the result of competition from large franchise restaurants. He stated over the past two years, five such establishments opened within one-half kilometre from his business.
14Mr. Nanou stated that recently things have started to look better as at least two of these competitors have closed up. In the past two weeks he has seen sales improve 20%.
15Mr. Nanou stated he is well on his way to meeting the $81,000 demand that is on file with the bank and would like 90 days to clear the balance of $68,000.
16In cross-examination, Mr. Nanou agreed that sales tax collected at source was collected in trust for the government. The witness admitted to knowingly taking monies from this trust fund. The witness admitted that it was two years ago when the heavy competition for business share started.
17The witness denied being made aware monthly of his ongoing debt situation. He stated billings were received by his accountant but he never saw them.
18In reply, Marilyn Blazevic was recalled by Mr. Morris. Exhibit #3 was introduced. It is a statement which, according to the witness, would have been sent to the Licensee monthly. The exhibit entered is a statement of account dated April 29, 2010 for the Licensee at his place of business indicating a balance owing of $68,552.31 as of that date. According to the witness these statements are sent out monthly.
Registrar’s Submissions
19The Registrar’s Representative, Mr. Morris, asked for findings for breaches of clauses 6(2)(a) and 6(2)(d) of the LLA. The Registrar alleges that pursuant to clause 6(2)(a), the Licensee has demonstrated that he cannot be expected to be financially responsible in the conduct of its business, and pursuant to clause 6(2)(d), the past or present conduct of the Licensee affords reasonable grounds for belief that the business will not be carried out in accordance with law and with integrity and honesty.
20It is clear that the Licensee has breached the trust obligation. In fact, prior to September 2008, the Licensee was in debt to the ministry. There has been an ongoing breach of trust by the Licensee. The few voluntary payments were clearly insufficient and in fact some of these, as indicated on the last page of Exhibit #2, were NSF cheques. The Licensee knew what he was doing and he knew these funds were to be collected in trust.
21The Registrar is opposed to giving any more time to try and satisfy this debt.
Licensee’s Submissions
22Mr. Nanou stated that the business is his family’s source of income. He pointed out that a good portion of the $68,000 debt outstanding is due to penalties and interest. He asked for time to satisfy the debt.
Reasons and Analysis
23The Board has carefully considered the evidence. From the evidence it is clear and was not refuted, that the Licensee owes the Ministry $68,552.31 as a result of sales tax remittances not being forwarded as required.
24The Board agrees with the submissions of Mr. Morris that these monies are collected by a Licensee in trust on behalf of the taxpayers and the Government of Ontario.
25This Licensee, based on the evidence including the supporting exhibits, has had difficulties with his remittances for a number of years, dating well back from the date of the first MOU, September 5, 2008. At that time the debt was $37,526.95. That debt today is $68,552.31 and growing.
26The Licensee stated his problems are primarily because of the economic conditions resulting from competition. The Board rejects this as an acceptable explanation. The very essence of business practice in this province and country is competition. Competition is expected and even if competition is fierce it does not give anyone justification to breach trust obligations.
27There have clearly been many attempts by the Ministry to resolve this matter in a more mutually acceptable way and all have failed. The Ministry, through its witness, does not believe this debt will be satisfied and requests the liquor licence of this licensee be revoked.
28The Board has not heard or seen any evidence that would give us any confidence that this debt will be resolved. Further, the Board is satisfied that this Licensee knowingly allowed this debt to develop by using funds entrusted to him under the terms of the Retail Sales Tax Act.
29The Board FINDS that pursuant to clause 6(2)(a) of the LLA, the Licensee cannot reasonably be expected to be financially responsible in the conduct of its business. Further, we FIND that pursuant to clause 6(2)(d) of the LLA, the present and past conduct of this Licensee in its dealings under the Retail Sales Tax Act affords reasonable grounds for belief that the business will not be operated in accordance with the law and with integrity and honesty.
Conclusion
30For the above reasons, the Board REVOKES liquor licence number 806085, issued to 1550049 Ontario Inc., operating as SHOELESS JOE’S, 12612 Hwy 50, Unit 13, Bolton, Ontario, L7E 1T6, effective immediately.
DATED AT TORONTO THIS 27th DAY OF May, 2010
ALEX MCCAULEY, BOARD MEMBER BRUCE S. MILLER, BOARD MEMBER