Registrar, Alcohol and Gaming Commission of Ontario v. 1765669 Ontario Inc., 2010 CanLII 36782

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-

1765669 Ontario Inc. operating as Sogo Bar & Lounge

Licensee

DECISION ON FINDINGS

Panel: Patricia McQuaid, Vice-Chair, AGCO

Brian J. Ford, 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 ) Richard Kulis, Representative

1765669 Ontario Inc., Licensee ) Randall Barrs, Representative

Allegations

1. A hearing into a Notice of Proposal (“NOP”) number 17954 dated March 18, 2010 to revoke a liquor licence and an Order dated March 18, 2010 to immediately suspend a liquor licence on an interim basis placed on liquor licence number 805767 (the “licence”), issued to 1765669 Ontario Inc., operating as SOGO BAR & LOUNGE, 4002 Sheppard Avenue East, Unit 101, Scarborough, Ontario, M1S 1X6, (the “premises”), on the basis of alleged violations of clauses 6(2)(d) and 6(2)(e) and subsection 16(1) of the Liquor Licence Act (the “LLA”) and subsections 15(1) and 45(2) of Ontario Regulation 719/90 (the “O.Reg”) made pursuant to the LLA, was held on March 25, 2010 in the City of Toronto.

2. On March 18, 2010 the Registrar ordered that an Interim Suspension be placed on the licence in the interest of public safety subject to an Order by the Board of the Alcohol and Gaming Commission of Ontario (“AGCO”). In its Order dated March 26, 2010, the Board rescinded the Interim Suspension subject to conditions.

Decision

3. The Board FINDS the Licensee contravened subsection 16(1) of the LLA and subsection 45(2) of the O.Reg and DISMISSES the allegation of a violation of clause 6(2)(d) of the LLA. The Board also accepts the WITHDRAWAL of the allegations of violations of clause 6(2)(e) of the LLA and subsection 15(1) of the O.Reg. Reasons follow.

Preliminary Matters

4. Mr. Kulis informed the Board with respect to paragraph 4 of the NOP, the particulars cited, there was no evidence, other than an utterance by Mr. Tang that he was the owner/manager of the licensed operations, therefore he would not be presenting any evidence in regards to Mr. Tang being an owner.

5. Mr. Kulis also stated with respect to facts alleged at page 3 of the NOP, that Mr. Tang was in the licensed premises in breach of said conditions on March 17, 2010, he was actually in the continuous company of one of his sureties, which was unknown to the AGCO Inspector at the time he saw Mr. Tang in the licensed premises. No evidence regarding past conduct (clause 6(2)(d) would be proffered.

6. Mr. Kulis advised that the Registrar is satisfied that Mr. Tang has no ownership in the establishment.

7. Mr. Kulis stated that there is a change with respect to the ownership and that the corporation will have to file a transfer application to update the ownership of the Corporation. A change in ownership has not been filed with the AGCO, which Mr. Kulis notes is a breach of subsection 16(1) of the LLA.

8. Mr. Barrs advised the Board that Mr. Tang, who was the manager, has been removed from any and all involvement with the organization.

9. Mr. Barrs also informed the Board that two shareholders were added to the corporation because of a need for further funds. He acknowledged there is a need to have the new corporate structure updated with the AGCO and that the process would begin immediately.

Registrar’s Evidence

10. Craig Davies is a Constable (“Cst.”) with Toronto Police Service 42 Division with 10 years experience.

11. Cst. Davies attended Sogo Bar on February 17, 2010 to execute a Criminal Code search warrant. He stated he arrived at the bar at 9:05 p.m. along with other members of the Toronto Police Service.

12. On entering the establishment, Cst. Davies met Vincent Tang who identified himself with his driver’s licence. Cst. Davies spoke to Mr. Tang, who told him he was the owner/manager of the establishment.

13. Cst. Davies went into the office of the establishment to conduct the search. Inside the office, a pellet gun and pellets were located. Also located in the office was a white powdered substance in a baggie, which is believed to be cocaine. (The white powder is being tested.)

14. Cst. Davies also stated a large amount of money was located inside a stool in the office. Another white crystal substance believed to be crystal meth was also located on the premises. The crystal meth was in a baggie which was tucked inside a pack of cigarettes.

15. Cst. Davies stated they also located a taser weapon inside a briefcase that was in the office. Documents inside the briefcase identified it as belonging to Vincent Tang.

16. Cst. Davies stated the cocaine weighed approximately 15 grams and that there was $30,000 hidden in the top of the bar stool.

17. Cst. Davies stated that the office is located at the back on the left, off the service bar area. The office is very small and contained a small desk, a small couch, computer equipment and a shelving unit.

18. Cst. Davies stated the cigarette pack with the baggie containing the cocaine was found in a box which was on the couch in the office. The cigarette package was at the bottom of the box.

19. The crystal meth was located in a cigarette pack in a box on top of a fridge just outside the office. The box contained other items as well. The box looked like a box in which lost items were placed such as gloves.

20. Cst. Davies stated that Mr. Tang was arrested on drug and weapons offences and taken to 42 Division. They left the bar at 10:30 p.m.

21. Cst. Davies stated at the time they were in the establishment there was a cook and a bartender on the premises.

22. Under cross-examination, Cst. Davies stated Mr. Tang was the target of the investigation and they also had a warrant for his vehicle as well. They were looking at Mr. Tang personally and they went to the bar knowing he would be there.

23. Cst. Davies stated the Criminal Code warrant was for a firearm. They located the pellet gun and that no charge was laid with respect to the pellet gun. The weapons charge was in relation to the taser weapon, which he described as 30 centimetres long and looked similar to a flashlight. No one else was arrested.

24. Cst. Davies stated that there had only been one other call to the bar, which he described as a sports bar, in 2009. He also reiterated they had not yet received the analysis of the substances believed to be crystal meth and cocaine.

25. Michael Gillespie is a Constable with the Toronto Police Service with four years experience.

26. Cst. Gillespie attended the establishment on February 17, 2010 at 9:05 p.m. to execute a Criminal Code search warrant. On entering the premises, he went to the office and began a search. While searching the office, he located a cigarette pack which contained a baggie with white powder in it. It is believed that the white powder is cocaine.

27. Cst. Gillespie stated that a vinyl covered stool fell over and made a funny sound. On checking the stool, it was found that the top of the stool came off and hidden inside of it was a large amount of money. The money was three stacks of tightly wrapped $20.00 bills, each stack totalled $10,000, with a total of $30,000.

28. Cst. Gillespie stated the items that were found, drugs and money, were turned over to Sergeant Hawco. Cst. Gillespie left the bar at 10:30 p.m.

29. On cross-examination, Cst. Gillespie stated the money and cocaine were not in plain view. The cocaine was in a lost and found box and the money was hidden inside the stool. The box containing the cocaine was one of a stack of three boxes in the corner of the office.

30. Bernard Hawco is a Sergeant (“Sgt.”) with the Toronto Police Service. Sgt. Hawco read the criminal record of Vincent Tang into the record, summarized as follows:

1. December 1992: Robbery, Youth Court, Sentence: Fine of $100.00.

2. April 6, 1993: Fail to comply with recognizance, Youth Court, Sentence: Time served.

3. March 7, 1994: Trafficking Narcotic, Youth Court, Sentence: Six months secure custody, 18 months probation.

4. April 25, 1994: Have for sale unlawful tobacco - Adult Court, Sentence: Fine of $20,000.00 and interim detention of four months.

5. August 2, 1994: Possession of unlawfully obtained liquor, Sentence: Fine of $1,500.

6. October 14, 1997: Theft over $5,000, Sentence: 1 day plus time served.

7. September 16, 1997: Theft over $5,000, Possession of property obtained by crime over $5,000, Sentence: 12 months consecutive with three years probation and restitution of $20,687.

8. May 4, 1998: Aggravated assault and theft under $5,000: Sentence: 12 months consecutive and 18 months probation.

9. April 3, 2001:

• Uttering counterfeit money, Sentence: 6 months and 8 months pre-sentence custody

• Fail to comply with probation order, Sentence: 2 months consecutive custody

• Possession prohibited firearm and ammunition, Sentence: 18 months on each charge, concurrent but consecutive

• Unauthorized possession of restricted weapon

• Traffic in scheduled substance, Sentence: five months consecutive (section 109 C.C.)

10. November 21, 2003: Robbery with violence and possession over $5,000, 13 months consecutive each charge, plus 164 days served pre-sentence custody.

11. January 23, 2008: Possession of a scheduled substance, Sentence: Fine of $1,500.

31. Mr. Barrs did not cross-examine the witness.

Licensee’s Evidence

32. Mr. Barrs described the establishment as a full service sports bar. He also stated it has not been the subject of any Provincial Offences Act charges nor is there any negative history with the AGCO.

33. By way of background, Mr. Barrs stated his clients are not trying to defend Mr. Tang, but it is noted that he was a good manager and did not have any breaches of the LLA while managing the establishment. Mr. Tang has agreed to remove himself from any and all involvement with the establishment.

34. Mr. Tang was hired because he had been a manager at another bar in Toronto, which he ran successfully.

35. Zheng Pan has worked for the establishment in various capacities for the past 14 months. He has also completed a three year course in Hospitality, Hotel and Restaurant Management at a community college. He is Smart Serve certified.

36. Mr. Pan worked in the kitchen of establishment and helped out at the bar. He has also been responsible for maintaining the liquor inventory at the bar.

37. Mr. Pan stated the bar is a full menu sports bar serving wine, beer and liquor. The bar opens at 11:00 a.m. and closes at 2:00 a.m. and has a capacity of 96.

38. Mr. Pan understands his new role as a manager is ensuring that the patrons are not over served, no minors are to be served and ensuring that there is no trouble in the establishment. He also understands Mr. Tang cannot come back to the establishment.

39. On cross-examination, Mr. Pan stated that there would be two other employees working at the establishment in addition to him. He would see the owner of the bar, Dora, twice a week, as did Mr. Tang.

40. In response to a question from the Board, Mr. Pan stated he started at the establishment in the middle of February 2009 and that while he was at college, he did a co-op with the Delta Chelsea Hotel in Toronto, working the front desk and in catering.

41. Mr. Pan also stated his primary responsibilities at the establishment were in the kitchen and the bar. He also did inventory and purchases of liquor. Up to this point he did not have much contact with the owner, but that he would once he took over as manager. He told the Board it was his intention to deal with her on a daily basis.

Registrar’s Submissions

42. Mr. Kulis stated the Registrar was withdrawing the allegations of violations of clause 6(2)(e) of the LLA and subsection 15(1) of the O.Reg.

43. Mr. Kulis stated with respect to paragraph 3(II)(c) of the NOP, regarding a violation of subsection 16(1) of the LLA, the Registrar would be satisfied with a warning, provided the Licensee filed the appropriate transfer documents updating the ownership structure of the corporation as soon as possible.

44. Mr. Kulis stated that the extensive criminal record of Mr. Tang, who was the manager, came to the attention of the Registrar as conduct falling within clause 6(2)(d) of the LLA.

45. However, given that the Licensee has consented to a condition on the licence prohibiting Mr. Tang from being involved or being in the premises in any capacity, and should the condition be imposed, the Registrar would not ask the Board to make a finding of clause 6(2)(d).

46. The information from the police with regards to the evidence found on the warrant, cocaine and crystal meth, and an illegal weapon and $30,000 in the manager’s office leads one to conclude drugs were stored in the licensed premises.

47. Mr. Kulis stated with respect to a violation of subsection 45(2) of the O.Reg, it is clear on the evidence that Mr. Tang had cocaine and crystal meth in the premises.

48. Mr. Kulis noted the presence of drugs, cocaine and crystal meth, hidden in cigarette packages in a box, and the $30,000 in $20 bills in three stacks, is consistent with drug activity. There is no doubt that the substances found are illegal drugs.

49. Mr. Kulis asked the Board to make a finding of a breach of subsection 45(2) of the O.Reg.

50. Mr. Kulis stated, as previously noted, the Registrar would be satisfied with a warning for breach of subsection 16(1) of the LLA.

Licensee’s Submissions

51. Mr. Barrs stated a document with respect to the change in the structure of the corporation has been prepared and an application for transfer being is being submitted to the AGCO forthwith.

52. Mr. Barrs stated the owners were not aware that they had to submit documentation when they brought on new financial partners and while not an excuse, it is an explanation.

53. Mr. Barrs also stated a personal history report for Mr. Pan would be submitted shortly to the AGCO. Mr. Pan has no previous violations with the AGCO.

54. Mr. Barrs submitted that the establishment is a small sports bar in not the best of neighbourhoods but in spite of that they have not had any violations.

55. Mr. Barrs submitted with respect to subsection 45(2) of the O.Reg, there is no report of drug activity with regard to the bar. The warrant was for Mr. Tang and for a firearm. It was Mr. Tang who had the drugs and the weapon. There is no suggestion by the officers that the owner or any of the other staff were implicated.

56. Mr. Barrs stated the owner of the establishment was clearly not aware of drug activity as Mr. Tang was doing a good job with the running of the business.

57. Mr. Barrs stated Mr. Tang will not be allowed on the premises and will not be involved in any way in the operation of the establishment.

58. Mr. Barrs notes the drugs, money, and weapons were well hidden from everyone else and the owner was not aware of or in any way complicit in any of the illegal activity that was the target of the police on February 17, 2010. The owner trusted Mr. Tang and he betrayed that trust.

Registrar’s Reply Submissions

59. Mr. Kulis stated that having drugs in the premises is a violation of subsection 45(2) of the O.Reg and while there is no allegation of trafficking, the person who managed the premises and had control, had drugs on the premises.

Reasons and Decision

60. Based on the evidence presented at the hearing, the Board lifted the interim suspension in an Order dated March 26, 2010.

61. The Order imposed two conditions on the licence, one of which is that “Mr. Vincent Tang is prohibited from being associated in any way with the business of the establishment, which includes ownership of any part thereof or as an employee of any type and from being present at or in the establishment in any capacity including as patron.” Given Mr. Kulis’ submissions in respect of the impact of such condition in the context of the alleged violation of clause 6(2)(d), the Board is prepared to accept that there is now no evidence before it in respect of the allegation and therefore dismisses the allegation of a violation of clause 6(2)(d) of the LLA.

Subsection 45(2) of the O.Reg

62. The Board heard evidence from two Toronto Police officers who executed a Criminal Code search warrant on the premises. The subject of the warrant was Mr. Vincent Tang.

63. During the search, a white powdered substance believed to be cocaine was found in a baggie hidden in a cigarette package which was hidden in a box of lost and found items in the office of the premises. Another substance, believed to be crystal meth, was found in a baggie hidden in another cigarette package in a different box.

64. The search also resulted in finding a pellet pistol and pellets in a desk drawer in the office and a taser weapon in a briefcase in the office. The briefcase had the identification of Vincent Tang in it.

65. As well, the police found $30,000 in cash, which was hidden inside a bar stool located in the office. The money was in $20 denominations and was in three tightly wrapped stacks of $10,000 each.

66. The Board also heard evidence from Sgt. Hawco of the Toronto Police Service who read into the record the extensive criminal record of Mr. Vincent Tang. The record did include convictions for drug trafficking.

67. Though the analysis of the drugs had not yet been completed, the Board however agrees with Mr. Kulis that the drugs alone is one issue but the money and the way the substances were hidden, do speak of drug activity.

68. The Board believes with all the evidence resulting from the search warrant, it can be safely stated that the substances are illegal drugs.

69. Therefore, the Board finds that there is a breach of subsection 45(2) of the O.Reg in that a controlled substance as defined in the Controlled Drugs and Substances Act (Canada) was held on the premises by a person to whom the Licensee had delegated authority to operate the establishment as manager. From the evidence of Mr. Pan, it appears that the Licensee had little involvement with the business, giving control of operations to Mr. Tang.

70. The Board also finds that there was a breach of subsection 16(1) of the LLA in that the proper documentation reflecting the new corporate structure was not filed with the AGCO.

Conclusion

71. For the above reasons, the Board FINDS the Licensee contravened subsection 16(1) of the LLA and subsection 45(2) of the O.Reg and DISMISSES the allegation of a violation of clause 6(2)(d) of the LLA. The Board also accepts the WITHDRAWAL of the allegations of violations of clause 6(2)(e) of the LLA and subsection 15(1) of the O.Reg.

Order

72. The Board ORDERS, with respect to the finding of a violation of subsection 16(1) of the LLA, that a warning be placed on the file of the Licensee.

73. Regarding the finding of a violation of subsection 45(2) of the O.Reg, the 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. Registrar’s Representative may serve and file any 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 19th DAY OF May , 2010

PATRICIA MCQUAID, VICE-CHAIR BRIAN J. FORD, BOARD MEMBER