Registrar, Alcohol and Gaming Commission of Ontario v. 1028186 Ontario Inc., 2011 CanLII 19776

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-

1028186 Ontario Inc. operating as Good Time Charlies (Licensee)

DECISION ON FINDINGS

Panel: Bruce Miller, Board Member Decision Date: February 15, 2011 Hearing Location: London, Ontario

Appearances

Registrar, Alcohol and Gaming Commission: Joyce Taylor, Representative 1028186 Ontario Inc., Licensee: Norman Aitken, Representative

Allegations

1A hearing into a Notice of Proposal (“NOP”) number 17684 dated November 9, 2009 to revoke liquor licence number 202111 (the “Licence”) issued to 1028186 Ontario Inc. (the “Licensee”) operating as GOOD TIME CHARLIES, 434 Dundas Street, Woodstock, Ontario, N4S 1C1 (the “premises” or “establishment”), 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 (“LLA”) or that the licence holder is in breach of a condition of the existing licence, was held on April 1, 2010 and on January 7, 2011 in the City of London.

Decision

2The Board DISMISSES the allegation that the Registrar has reason to believe that the Licensee would be disentitled to a licence under section 6 of the LLA or that the licence holder is in breach of a condition of the existing licence. Reasons follow.

Preliminary Matters

3Mr. Aitken requested the hearing be adjourned for three to six months to allow a proposal that the Licensee had put forward to the Ministry of Revenue (the “Ministry”) to be fulfilled. The proposal would see the Licensee make an immediate payment of $5,000.00 to offset monies owed to the Ministry for Retail Sales Tax ("RST") payments that were in arrears. The Licensee would also pay the Ministry $5,000.00 on the first of each month thereafter until all outstanding monies owed to the Ministry were paid. Mr. Aitken advised that the Licensee's landlord would suspend the Licensee's obligation to pay rent for the next 15 months if the proposal is accepted. Mr. Aitken stated that the Licensee has a good record and he should be given an opportunity to clear the current situation.

4Ms Taylor stated the Registrar's position was to oppose the request for an adjournment. The Notice of Proposal was dated four months ago and the Licensee’s proposal was only put forward to the Ministry last week. Further, she intended to introduce evidence that on at least one occasion the Licensee had failed to fulfill a proposal. Mr. Chappell did not bring any funds with him to the hearing. There is still a substantial debt. Mr. Chappell has not kept his filings current. The Ministry rejected the proposal and the request for an adjournment should be refused.

5Mr. Aitken replied that the records will show that the Licensee paid the Ministry $22,000.00 on February 17, 2010. Mr. Aitken stated the Licensee could go and get a bank draft today for $5,000.00.

6The Board RULED that the hearing would proceed. There appeared to be a dispute on some of the facts and the Board needed to hear the evidence.

Registrar's Evidence

7Marilyn Blazevic has been a field collection officer with the Ministry since 1991 and has been employed at the Ministry since 1982.

8The Licensee is in arrears for $66,826.20 for non-payment of RST as of April 1, 2010.

9Ms Taylor submitted a spreadsheet which showed the filings and activity on the Licensee’s RST account from October 31, 2004 to March 31, 2010 which the Board entered as Exhibit # 1.

10The Licensee has made no payments from October 1, 2008 to January 1, 2010.

11Payment for any given month must be made on or before the 23rd of the following month.

12The RST was collected by the Licensee for the month of January 2010. The amount owed, $3,061.09, was filed but there was no payment made to the Ministry.

13The RST amount owed was not filed for February 2010.

14The witness is aware of the proposal made by the Licensee to pay the outstanding monies that are owed to the Ministry.

15Ms Taylor submitted a position paper prepared by the Ministry that summarized the Ministry’s position and stated the Licensee “has clearly demonstrated that he/she can no longer be expected to be financially responsible for the control and remittance of RST paid to him/her in trust by patrons on their purchase of beverage alcohol”. The document was entered as Exhibit # 2 by the Board.

16The Ministry conducted an RST audit on the Licensee in 2008. The audit covered the period from October 1, 2004 to June 30, 2008. The audit revealed that $10,915.99 had been collected by the Licensee and was not remitted to the Ministry. Ms Taylor submitted the audit notice of assessment which the Board entered as Exhibit # 3. The Ministry did a third party garnishment of $22,000.00 earlier this year which was applied to the monies owed resulting from the audit.

17There was a Memorandum of Understanding (“MOU”) between the Licensee and the Ministry dated October 20, 2008 which Ms Taylor submitted and the Board entered it as Exhibit # 4. The MOU acknowledged the Licensee was indebted to the Ministry for $12,055.07. The MOU stated the Licensee would file all future RST returns with full payment and that the Licensee would pay the arrears with weekly instalments to the Ministry of $315.00. The MOU was signed by Dennis Chappell. The MOU called for the October 2008 return to be filed and paid by November 23, 2008. No payment was ever received.

18The Ministry does not accept the Licensee’s proposal. The MOU was breached almost immediately and the outstanding balance continues to grow. The Licensee does not hold the RST monies collected in a separate account, as he is required to do.

19On cross-examination the witness was asked a number of questions regarding the balance sheet (Exhibit # 1).

20The balance sheet showed a credit of approximately $22,000.00 on February 17, 2010. It is possible that Mr. Chappell alerted the Ministry about the $22,000.00 which the Ministry recovered through a garnishment.

21As of today’s hearing the only return the Licensee never filed was for February 2010.

22She does not know why the Ministry’s position paper (Exhibit # 2) does not reflect that the Licensee informed the Ministry of the existence of $22,000.00 which the Ministry garnished.

23Mr. Aitken requested a motion for non-suit as the Ministry’s balance sheet (Exhibit #1) showed the Licensee had made payments of approximately $55,000.00 in the past month and a half. Mr. Aitken also stated he had asked for disclosure on how the Ministry accounting was done but had never received the information.

24Ms Taylor replied that she had received no such request.

25Mr. Aitken submitted a document dated March 11, 2010 addressed to the AGCO requesting the disclosure which the Board entered as Exhibit # 5.

26After some discussion Mr. Aitken acknowledged the request had been forwarded to the wrong department within the AGCO and that the Registrar had not received it. The Board RULED against the motion for non-suit as the motion was premature. Registrar’s counsel still had an opportunity to call further evidence and the Board was still dealing with the cross-examination of the first witness.

27Mr. Aitken continued with his cross-examination. The witness stated she was not aware that local Ministry employees had advised the Licensee to make some operational changes which included shortening hours of business. She stated that since October 2004 the Licensee had remitted approximately $370,000.00 out of a total of $410,000.00 in RST.

28In reply she stated the balance outstanding is $66,826.20.

29Exhibit # 1 does not identify every payment made by the Licensee. The monies owed for September and October 2009 were paid in full. The Ministry never received any objection or notice of appeal for monies outstanding.

30The Board then asked a number of questions. The Licensee’s account, Exhibit # 1, shows the Licensee’s account on a monthly basis. Activity shown in any month may be the result of monies paid or interest accrued because of the debt. The Ministry may receive money from the Licensee in any given month and apply it to a debt owed for a previous month.

31The Licensee’s debt has grown from approximately $12,000.00 in 2008 to the current $66,000.00.

32Payments have been received since the MOU was signed. They have been made in full some months, partial in others and are nonexistent for some months.

33The Ministry received the $315.00 weekly payments as per the MOU but the balance was not paid in full as per the agreement.

34The Licensee has filed all monthly returns except for February 2010.

35Mr. Aitken clarified that the $315.00 weekly payments were received but that the witness was unable to tell what months they were filed under in Exhibit # 1.

Licensee’s Evidence

36Dennis Chappell became the owner of Good Time Charlies in 1993 when he purchased it from the two prior owners. He had to pay an outstanding tax debt of $87,000.00 when he took over the business.

37In 2005 Toyota announced it was opening a plant in the area. Everyone thought it was going to be an economic boost for the city. Five new bars/restaurants opened and saturated the market. Only one of the establishments remains open and it is only open for one day a week.

38Revenue for Good Time Charlies decreased significantly because of the new competition. The one establishment that remains open one day a week reduced Good Time Charlies revenue by 70% the first week that they opened.

39He files the RST returns on a monthly basis and believes that everything is now up to date.

40Prior to 2005 he was able to support community events through revenue from Good Time Charlies. He believes he contributed in excess of $300,000.00 to the community.

41He alerted the Ministry that he was going to be awarded funds as the result of a civil lawsuit and the Ministry was able to garnish the full amount of $22,000.00 in February 2010.

42Ministry representatives advised him to make operational changes which he accepted. A year ago he used to operate 7 days a week and he is now open 2.5 days a week. This has allowed him to cut down on his overhead.

43The other major change is that his landlord has offered to waive his rent on Good Time Charlies until his RST debt is paid. The landlord has offered to waive his rent for a period of up to 15 months. He would then have his rent increased after that period to pay back his landlord.

44He believes his chances of success for reviving the business are 100 %.

45In the last two years he has exhausted $80,000.00 in RRSP savings and has placed a second mortgage on his home.

46He intends to go to the bank and get a cheque for $5,000.00 for the Ministry today.

47He has never been subject to any discipline by the AGCO.

48In the past three months he almost sold 49 per cent of the business for $150,000.00 which would have cleared up all his debt. Unfortunately the purchaser became very ill and the deal fell through. He is now dealing with two employees who have expressed an interest in acquiring a share of the business.

49On cross-examination he stated he didn’t have a copy of a letter of intent or any documentation from the parties interested in purchasing Good Time Charlies.

50He hasn’t reviewed his new business plan with the Ministry.

51He has not made any payments to the Ministry since the $22,000.00 was garnished.

52He is able to pay the Ministry $5,000.00 today as he just received the money from his life insurance. He has to go to the bank to get a cheque for the amount.

53He did not know of the $87,000.00 in outstanding RST when he bought the business. He did not sue the previous owners to try to recover the money.

54He receives monthly statements from the Ministry. He does not keep a separate savings account for the RST he collects. He has used some of the RST monies to finance his business. He has never filed an appeal or objected to the RST amounts owed.

55On reply he stated he did not sue the previous owners for the outstanding RST debt as he knew he wouldn’t be able to collect any money.

56Michael D’Emilio has been the landlord for Good Time Charlies for 17 years.

57Mr. Chappell discussed his new business plan with him. The plan included reducing hours of operation in order to drive down costs. He believes that Mr. Chappell’s plan will be successful. He has decided not to collect rent from Mr. Chappell for the next 12 to 15 months until Mr. Chappell has paid all monies owing to the Ministry. Following that he will slowly collect the back rent for the 12 to 15 month period from Mr. Chappell. The witness will also hold a mortgage on Mr. Chappell’s home. He does not have the agreement with him as it is currently with his lawyer.

58On cross-examination he stated the rent for Good Time Charlies is $5,000.00 per month. There is another $1,200.00 on top of that for insurance and taxes. Mr. Chappell will be responsible for paying the $1,200.00 during the 12 to 15 month period but not the $5,000.00. If the business closes Mr. D’Emilio will be responsible for paying the $1,200.00 monthly fee.

59Mr. Chappell approached him about the new business plan about two or three weeks ago. It was agreed to in principle about a week and a half ago. It has yet to be put in writing as his lawyer was away.

60The agreement does not mandate that the current RST be paid in full on an ongoing basis.

Registrar’s Submissions

61The issue is whether the Licensee can reasonably be expected to be financially responsible in the conduct of his business and whether Mr. Chappell will carry on business in accordance with the law, which includes the Retail Sales Tax Act.

62It is clear the Licensee has not been operating in accordance with the Retail Sales Tax Act over the past 18 months.

63The Licensee has not disputed the amount owed.

64The amount owed has increased from approximately $12,000.00 since the 2008 MOU was signed to almost $67,000.00. Mr. Chappell has been using taxpayers’ monies to finance his business. These are trust monies that are required to be held in a separate account. Mr. Chappell should have set up a separate account if he was serious about keeping his payments current. Mr. Chappell is not a bad person but the reality is that taxpayers are acting as his bankers. This gives him a competitive advantage over others who submit their payments in a timely fashion.

65The Notice of Proposal was dated November 9, 2009, yet he waited until three weeks ago to approach his landlord. It should be noted that the agreement with his landlord does not address the need to keep payments current. Mr. Chappell is asking for 12 to 15 months to repay a debt, some of which has been owing for 18 months.

66The Ministry is in the best position to determine if a payment schedule is reasonable and not the Board. The Ministry has rejected the proposal and so should the Board. Mr. Chappell has done too little, too late. The Board should make a finding that the Licensee cannot reasonably be expected to be financially responsible in the conduct of his business and that the Licensee will not carry on business in accordance with the law. The Board should revoke the Licensee’s licence.

Licensee’s Submissions

67The particulars in the Notice of Proposal address two different areas. The first is that the Licensee failed to file RST returns to the Ministry. The Licensee filed all of his returns with the exception of February 2010. It would be “beyond draconian” for the Board to revoke a licence for one month’s omission. The second area concerns a failure to remit funds and the Licensee admits that he is in arrears. The central question is whether the $66,000.00 in arrears leads to the reasonable conclusion to make a finding.

68There has been a recession over the past two years. People are not spending and this has been coupled with saturation issues in the Woodstock hospitality industry. Five businesses opened in 2005 and only one remains open on today’s date and it only operates one day a week.

69The corporation owed $87,000.00 when Mr. Chappell started his business. He could have closed the door and started a new business but he chose to pay all the money back. The Licensee supported his community to the amount of $300,000.00. He also followed the Ministry’s advice on how to cut costs.

70He has staked everything on the business. He has sold his RRSPs and has mortgaged his home. He has explored selling a portion of the business and continues to do so.

71He has been in business for 17 years and is in a better position to assess his chances for success than the Ministry. His landlord of 17 years supports the business plan and has agreed to waive the rent.

72The Licensee intends to pay all monies owing. He will proceed with his proposal whether the Ministry accepts it or not. The evidence does not support the revocation of the licence and the Board should dismiss the allegation.

Registrar’s Reply

73If the Board listened to all Licensees there would be no revocations. Mr. Chappell is trying to save his business. Why did he not bring the $5,000.00 with him if he really intended to proceed with his proposal? Mr. Chappell has paid off his creditors and not the Ministry. The deal with the landlord protects the landlord but does not protect the Ministry.

74The Board should reject Mr. Chappell’s proposal and revoke the licence forthwith.

Additional Submissions

75Mr. Aitken submitted additional information in correspondence dated April 8, 2010. The correspondence consisted of a Letter of Intent between the Licensee and K.W. to purchase a 49 per cent interest in Good Time Charlie’s for $150,000 on June 30, 2010. There was also a letter from K.W.’s business associate who indicated a desire to partner with K.W.

76Ms Taylor responded on April 21, 2010 and stated the Board should disregard the material. The Letter of Intent clearly states that it is not binding on either of the parties and there is no assurance the transaction will proceed. Furthermore, Mr. Chappell did not file his latest RST return with any payment. He has not made any payments since the hearing on April 1, 2010 and the amount owed to the Ministry continues to grow.

77The Board requested an update from the Licensee on the status and balance of the outstanding retail sales tax owed as well as a report setting out the monthly RST reported and paid to the Ministry in correspondence dated May 3, 2010. Mr. Aitken advised the Licensee had kept his filings current and had made payments of $5,000 for monies owed on May 3 and June 1, 2010. Mr. Aitken supplied copies of the payments as Ms Taylor disputed some of the payments.

78The Board requested a further update on the status and balance of the outstanding RST owed as well as a report setting out the monthly RST reported and paid to the Ministry from the Licensee in correspondence dated June 28, 2010.

79There was disagreement over the facts between Ms Taylor and Mr. Aitken and the Board decided to reconvene the hearing on January 7, 2011 in the City of London. Ms Taylor suggested that the Licensee should proceed first with his evidence and this was done on consent.

Licensee`s Evidence, January 7, 2011

80Dennis Chappell is the owner of Good Time Charlies.

81Mr. Aitken submitted a document outlining payments made towards the RST arrears as well as payments made towards the RST on an ongoing basis. The Board entered the document as Exhibit # 6.

82Ms Taylor stated it was jointly agreed that the Licensee made payments of $5,000 on May 3, 2010, June 1, 2010, June 29, 2010 and July 31, 2010. There was also a payment received of $152.72 made on June 23, 2010. These payments were for RST arrears. It was agreed that current payments were made for RST monthly from March through July 2010.

83Mr. Chappell testified the Harmonized Sales Tax (“HST”) commenced on July 1, 2010. He now files his HST returns quarterly instead of monthly as he did with RST. He went to the tax office and was referred to an official who he spoke to on the phone. He was advised to submit his payment for the RST arrears to the Canada Revenue Agency (“CRA”). He made the following payments to the CRA for a total of $18,000:

1. August 31, 2010 - $2,000
2. October 19, 2010 - $5,000
3. October 31, 2010 - $5,000
4. December 9, 2010 - $5,000
5. December 9, 2010 - $1,000

84The witness had copies of the cheques for the above payments in Exhibit # 6.

85The witness testified he forwarded a cheque for $5,000 to the Ministry of Revenue on December 30, 2010 after he learned the August 31 to December 9, 2010 payments had not been received by the Ministry of Revenue.

86His business is doing much better now. His landlord continues to waive the rent on his property until he has fully paid his outstanding tax debt.

87Mr. Aitken submitted a letter sent to the Winnipeg Tax Centre dated January 6, 2011 which the Board entered as Exhibit # 7. The letter outlined that $18,000 had been mistakenly sent to the CRA instead of to the Ministry.

88He has paid $66,000 in arrears since January 2010 and believes he owes approximately $21,000 not including interest.

89On cross-examination he stated he delivered his cheques to the federal tax office starting in August. He went to the provincial office prior to July 1, 2010. He is just trying to do what is right. He has been directed all over the place about the tax matter since the inception of the HST. He does not understand which is federal and which is provincial.

90He did not bring his federal statement regarding his HST payments to the hearing.

91He was advised in November or December that the Ministry had stopped receiving payments for the arrears.

92Ms Taylor submitted a letter from her to Mr. Aitken dated November 4, 2010 advising that the Ministry had received no payments since August 3, 2010. The Board entered the correspondence as Exhibit # 8.

93The witness advised he was aware there was a problem and that the Ministry was not receiving payment for the arrears.

94The witness did not know when he would be able to recover the $18,000 along with a $3,000 credit that he is owed.

95On reply he stated he was current with his HST filings.

96He believes he is owed a $3,000 HST credit.

97There has been an ongoing struggle to get accurate figures from the Ministry.

98He was aware there was a problem with the arrears payments going to the CRA and has instructed his counsel to fix the problem.

99In responses to questions from the Board he agreed he owed approximately $66,000 as of April 1, 2010. He stated he has paid approximately $46,000 in arrears since then and by his accounting should owe about $21,000.

100He has kept current on all his RST and HST filings since the last hearing.

Registrar’s Evidence January 7, 2011

101Richard Jucker has been a collections officer with the Ministry since 1998. He worked for Revenue Canada from 1995 to 1998.

102The Licensee has $52,630.69 outstanding for unpaid RST.

103Ms Taylor submitted a document from the Ministry listing the outstanding debt which the Board entered as Exhibit # 9.

104Ms Taylor submitted a document from the Ministry listing payments made by the Licensee from January 12, 2009 until August 3, 2010 which the Board entered as Exhibit # 10.

105Ms Taylor submitted a document from the Ministry showing the Licensee’s account since October 31, 2004 until June 30, 2010 which the Board entered as Exhibit # 10.

106The witness stated the Licensee has made no payment to the Ministry since August 3, 2010.

107The Ministry does not know if the Licensee made the arrears payments to the CRA.

108The witness understands the Licensee is trying to recover $18,000 in payments that were mistakenly forwarded to the CRA. The only way to recover these funds is via a credit as long as there is no outstanding balance. It is his experience that it takes four to six weeks to receive a credit.

109The Ministry has no record of the December 30, 2010 payment by the Licensee but this is understandable as the payment was made over the holidays.

110To his knowledge the Licensee has not disputed the monies owed to the Ministry.

111On cross-examination he stated the Licensee owed approximately $52,000.

112In response to questions from the Board the witness stated the Licensee made all filings and payment between April 1 and June 30, 2010. The June payment was for $2,368.07 when the total owed was $2,421.12.

113There was no reply.

Licensee’s Submissions, January 7, 2011

114The reason for the request to revoke the Licensee’s liquor licence is an allegation of financial irresponsibility. The question for the Board is whether the Licensee has refuted that allegation.

115The Board is aware of all the evidence from the previous hearing date. The Licensee committed to keep his RST payments and filings current and to make monthly payments of $5,000 towards the arrears. He has kept his commitment.

116Earlier this year he notified the Ministry of $22,000 that he was owed from a civil settlement. The Ministry garnished those monies. The Licensee is responsible.

117The Ministry acknowledges he has made payments towards the arrears totalling $21,152.72 from April 1 to December 31, 2010.

118The HST commenced July 1, 2010. The Licensee made payments of $18,000 from August 31 to December 9, 2010 which went to the wrong agency. There is evidence of the payments being made and the Licensee was just following the instructions he was given. The money was finally tracked down two days ago and the process to have it returned has begun.

119The Licensee’s landlord continues to waive the rent until the back taxes are paid.

120The Licensee’s business continues to improve.

121The Licensee has fulfilled his commitment made on April 1, 2010 and the Board should dismiss the application.

Registrar’s Submissions, January 7, 2011

122The Licensee currently owes $52,630.69.

123Mr. Aitken suggests that $18,000 went awry. The issue was brought to the Licensee’s attention at the beginning of November 2010. There is no evidence that the Licensee made any inquiries with the CRA between November 4 and January 6, 2011. You start where you paid the money when you are looking for missing funds. If the Licensee had started the recovery process in November the funds would have been collected by now.

124There is no evidence the Licensee has any tax credit.

125The Licensee knew there was a problem with where the money was going but still made a payment of $6,000 to CRA on December 9, 2010. There was no payment made to the Ministry until the end of December 2010.

126There is not as much confusion as was first suggested.

127It should be noted there was no $5,000 payment made in April 2010.

128The Board should draw a negative inference from the fact that the Licensee has not produced his HST statement. One wonders if the Licensee is attempting to count money twice. We do not know the answer to that question as the information was not provided. A financially responsible Licensee would have tracked the money down before the day prior to this hearing. The Licensee has done a little at the last minute but is asking for a lot of credit.

129The Licensee’s liquor licence should be revoked but if the Board is inclined to give the Licensee any added time it should not exceed six weeks. The Board should also ensure that the $18,000 is paid to the Ministry and that the Licensee provides HST statements showing there are no monies owed.

Licensee’s Reply, January 7, 2011

130What transpired with the $18,000 is not the fault of the Licensee.

131Mr. Chappell has demonstrated financial responsibility.

132When questioned by the Board if a further time extension should be given, Mr. Aitken replied that this has been and continues to be a costly process for the Licensee. The Licensee has no control over the $18,000 and although the Licensee will be applying for it, the monies may not be received within six weeks.

133The Licensee has demonstrated he can repay his debts and the application should be dismissed.

Reasons and Analysis

134This has been a protracted process that has involved some difficult issues, many of which were in dispute. The Board has carefully considered all the evidence and the submissions presented and DISMISSES the allegation for the reasons given below.

135This matter revolves around the question of whether the Licensee should be disentitled to a licence under section 6 of the Liquor Licence Act which reads as follows:

6. (1) A person may apply to the Registrar for a licence to sell liquor. R.S.O. 1990, c. L.19, s. 6 (1); 2002, c. 18, Sched. E, s. 7 (3).

Requirements

(d) Subject to subsection (4) or (4.1), an applicant is entitled to be issued a licence to sell liquor except if,

(a) having regard to the applicant’s financial position, the applicant cannot reasonably be expected to be financially responsible in the conduct of the applicant’s business;

(b), (c) Repealed: 1998, c. 18, Sched. E, s. 167 (1).

(d) the past or present conduct of the persons referred to in subsection (3) affords reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty;

(e) the applicant or an employee or agent of the applicant makes a false statement or provides false information in an application under this Act;

(f) the applicant is carrying on activities that are, or will be, if the applicant is licensed, in contravention of this Act or the regulations;

(f.1) the applicant is carrying on activities that contravene, or will contravene if the applicant is licensed, a by-law of the City of Toronto passed under subsection 62.1 (1);

(g) the premises, accommodation, equipment and facilities in respect of which the licence is to be issued are not, or will not be, if the applicant is licensed, in compliance with this Act and the regulations;

(g.1) the applicant is not able to demonstrate to the satisfaction of the Registrar that he, she or it will exercise sufficient control, either directly or indirectly, over the business, including the premises, accommodation, equipment and facilities in respect of which the licence is to be issued; or

(h) the licence is not in the public interest having regard to the needs and wishes of the residents of the municipality in which the premises are located. R.S.O. 1990, c. L.19, s. 6 (2); 1998, c. 18, Sched. E, s. 167 (1, 2); 2006, c. 11, Sched. B, s. 8 (1); 2006, c. 34, s. 16 (5).

136The key clauses for the Board to consider are (a), (d) and (f) which are referenced in the Notice of Proposal.

137With regards to the evidence at the April 1, 2010 hearing the Board noted the Ministry’s accounting records lacked detail and clarity in some areas. Some of the Ministry’s evidence was clearly confusing. However it became clear that the Licensee was $66,826.20 in arrears.

138It was also clear at the April 1, 2010 hearing that the Licensee’s debt had grown from approximately $12,000.00 in 2008 to approximately $66,000.00. Payments to the Ministry had been received since the MOU was signed. They have been made in full for some months, partial payments have been made in other months and no payments were made for some months. The Ministry received payments for the $315.00 weekly cheques but the balance was not paid in full as per the MOU. The Licensee has filed all monthly returns except for February 2010.

139There was a dispute as to whether the Licensee had paid $22,000.00 to the Ministry in February 2010. It was unchallenged, after all the evidence was heard, that the Licensee alerted the Ministry to the existence of the funds which the Ministry garnished. The Board accepted this and viewed this as a very positive step by the Licensee.

140The Board put a significant amount of weight in the evidence of the landlord, Mr. D’Emilio, who had been the landlord for the 17 years that Mr. Chappell has owned Good Time Charlies. Mr. D’Emilio agreed to forgo the monthly rent of $5,000.00 for a period of 12 to 15 months in order for Mr. Chappell to make good on his RST debts. Mr. D’Emilio believes in Mr. Chappell’s business plan and is in a good position to be able to judge the success of the plan.

141The Licensee has been in business for 17 years. It was undisputed that the Licensee has never been subject to any disciplinary measures by the AGCO. Further there was evidence that the Licensee was a good corporate citizen and supported the community with donations of approximately $300,000.00. The hospitality market in Woodstock became over saturated in 2005. This had a large impact on the Licensee’s revenue. This was further exacerbated by the economic downturn. There were no concerns raised about the Licensee’s character or any failure to follow laws and regulations other than the RST Act. In addition, the over-saturation of the local market has lessened with the closing of four of the five new businesses that opened in 2005.

142The Board must examine whether the Licensee can be expected to be financially responsible in the conduct of his business and if there are grounds for belief that the applicant will not carry on business in accordance with the law.

143The Board requested updates and additional information from counsel on two separate occasions. The Board was concerned that some of the Ministry’s evidence had lacked clarity. The Board also took this unusual step based on the Licensee’s new business plan to repay the arrears while keeping payment. The business plan’s credibility was strengthened by the clear support of the Licensee’s landlord. When the Board found the additional information requested to be in dispute the Board reconvened the hearing on January 7, 2011.

144The Board put no weight on the issue of the Letter of Intent to purchase the premises which was included in the additional submission by Mr. Aitken dated April 8, 2010. The Board agrees with Ms Taylor that the document is non-binding on any of the parties. Mr. Chappell already testified at the hearing that he had been trying to sell a portion of the business and had a possible pending offer. There was no update on this issue at the January 7, 2011 hearing so the Board can only infer that this is now a non-issue.

145The real question for the Board is whether the Licensee can turn his business around and repay all monies owed to the Ministry while keeping ongoing monthly payments current. The Board was interested in what changes if any have transpired and what steps the Licensee has taken to address the issue. The Licensee has accepted advice from the Ministry in the last year to alter his business and hours of operation.

146There was no dispute that the Licensee had kept his RST filings and payments current from April 1, 2010 until July 1, 2010, when the HST took effect. The Board acknowledges the June payment was approximately $50.00 less than what it should have been but this was not a material amount and may have been the result of an error on the Licensee’s part.

147There was also no dispute that the Licensee paid $20,152.72 to the Ministry towards the arrears between May 3 and July 31, 2010. The Licensee produced evidence that he paid a further $5,000 on December 30, 2010.

148It was also clear the Licensee mistakenly paid $18,000.00 to the CRA between August 31 and December 9, 2010. The Licensee thought these payments were towards the RST arrears owed. The Licensee was clearly frustrated by his dealings with both the Ministry and the CRA and stated that he was just trying to do the right thing.

149There is no doubt the Licensee dug himself a large hole. He has taken advice from the Ministry to turn his business around. His business is improving. He still has the support of his landlord. More importantly he took steps to repay approximately $43,000 since the last hearing date.

150Based on the balance of probabilities the Board believes the Licensee can be expected to be financially responsible in the conduct of his business and that there are grounds for belief that the applicant will carry on business in accordance with the law. The NOP was dated November 9, 2009. The Board does not see a need to prolong this process based on the progress and conviction demonstrated by the Licensee.

151This was a unique case in many regards. It took a protracted period of time to work through some of the evidence. The Board was impressed by the Licensee’s new business plan which was supported by the Licensee’s landlord. This was a very difficult decision for the Board. The Licensee must be very vigilant in paying off his debt to the Ministry in full in a timely fashion and ensuring that he both files and keeps monthly HST payments current. The Board strongly cautions the Licensee that similar breaches can only result in the most serious of ramifications for the Licensee.

Conclusion

152For the above reasons, the Board DISMISSES the allegation that the Registrar has reason to believe that the Licensee would be disentitled to a licence under section 6 of the LLA or that the licence holder is in breach of a condition of the existing licence.