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-

Adams Pizzeria (Prescott) Ltd. operating as Limit Exotic Licensee

AMENDED DECISION

Panel: David C. Gavsie, Chair Joan Lougheed, Board Member

Decision Date: August 24, 2011 Hearing Location: Ottawa, 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 ) Scott Hutchinson, Representative Adams Pizzeria (Prescott) Ltd., Licensee ) Lawrence Greenspon, Representative

Authorities

1. 1213963 Ontario Ltd (c.o.b. Sin City Bar and Eatery v. Ontario)( AGCO), [2009] O.J.No.1553
2. 1213963 Ontario Ltd v. Ontario ( AGCO), ONCA 323
3. Com & Play Café Inc (c.o.b. Vivid Bar Lounge ( Re), [2010] O.A.G.C.D. No. 283
4. F. v McDougall, 2008 SCC 53, [2008] 3 S.C.R.41, 2008 SCC53
5. Horseshoe Valley Resort Ltd v. Ontario (AGCO), [2005] OJ No 4895
6. Horseshoe Valley Resort Ltd v. Alcohol & Gaming Commission, [2005] O.J. No.5985
7. Hunter v. Southam Inc., 1984 CanLII 33 (SCC), [1984] 2 S.C.R. at 145
8. Lawson A.W. Hunter v. Southam Inc., 1984 CanLII 33 (SCC), [1984] 2 S.C.R. 145
9. Mikos Hotel v. Ontario ( AGCO), [2009] OJ No 3176 (Div Ct)
10. Rejeanne’s Bar and Grill Ltd vs Ontario (AGCO), [2009]O.J. No.3176 ( Ont Div Ct)
11. R. v. Araujo, 2000 SCC 65, [2000] 2 S.C.R. 992
12. R. v. Garofoli, 2 S.C.R. 1421
13. R. v. Kent, 1994 CanLII 62 (SCC), [1994] 3 S.C.R.133
14. R. v. Morelli, 2010 SCC 8, [2010] 1 S.C.R. 253
15. Re 1642849 Ontario Ltd, [2008] OAGCD No 54
16. Re 535702 Ontario Inc., [2009] OAGCD No 240
17. Re Ashley, [2008] OAGCD No 330
18. Re Fex Inc., [2009] OAGCD No 149

Allegations

1. A hearing into Notice of Proposal (“NOP”) number 18016, dated April 16, 2010 to revoke liquor licence number 201939 (the “licence”) issued to Adams Pizzeria (Prescott) Ltd. (the “Licensee”) operating as LIMIT EXOTIC LOUNGE, 147 King Street West, Prescott, Ontario, K0E 1T0, on the basis of alleged violations of section 6 of the Liquor Licence Act (the “LLA”) and section 52 and subsections 25(1), 31.1(1), 34(1), 45(1) and 45(2) of Ontario Regulation 719/90 (the “O.Reg”) made pursuant to the LLA, was held on August 10 and 17, 2010, November 8, 2010 and April 12, 2011 in the City of Ottawa.

Decision

2. The Board orders the immediate REVOCATION of the liquor licence for Adams Pizzeria (Prescott) Ltd. operating as Limit Exotic Lounge, Liquor Licence Number 201939. Reasons follow.

Preliminary Matters

3. The Board ordered the exclusion of witnesses on consent of all parties.

4. On April 12, 2011 there was agreement by all parties, accepting the certification validating the nature of the drugs found in the office on the premises of Limit Exotic Lounge as having been identified properly.

5. The Registrar withdraws allegation 3(d), relating to the sale and service of alcohol outside prescribed hours and the Board accepts this withdrawal

Registrar’s Evidence

6. Police Constable (“PC”) Stephane Huneault has worked with the Ontario Provincial Police (the “OPP”) for 14 years in areas that include investigating drug offences and major crime.

7. On April 13, 2010, PC Huneault attended the Limit Exotic Lounge with a search warrant. He had been to the premises before and knew the Licensee.

8. Following a briefing led by Investigator Cam Stewart, PC Huneault attended the premises as a member of Team #1. Each of the two teams had an objective and Team #1 was to focus on the main level of the establishment.

9. Using Exhibit #1, PC Huneault described the interior of the premises as having a long bar on the left hand side. At the end of the bar is a door leading to the kitchen.

10. At the entrance are two doors; one door leads into the bar and one goes to stairs to the upper level.

11. On entering the premises at the designated time, police presence was announced immediately. The room was dark and he could not see anyone. He made his way into the kitchen through a swing door and to the office. He noted that there was a door leading outside to the rear parking lot.

12. PC Huneault stated that he was assigned to search the office as part of a search warrant. He had a calibrated scale with him for the search. The officer gave a detailed description of the office which was approximately 10 foot by 10 foot and cluttered.

13. At 12:15 p.m. he started searching through various materials. PC Huneault located a tin container on a shelf that had a beige canvass pouch inside. He identified, in the pouch, the following items:

• A four ounce baby bottle liner with 28 grams of suspected cocaine;
• A second four ounce baby bottle liner containing a white powder weighing 18 grams;
• Another four ounce baby bottle liner, containing nine grams of suspected crack cocaine;
• One large Ziploc plastic bag which was secured with a rubber band containing 48 grams of white powder, suspected to be cocaine;
• One small Ziploc bag containing four empty and new four ounce baby bottle liners;
• One Ziploc bag with a red logo of an apple; this bag contained 52 smaller plastic bags with a red bulldog logo on it. These bags are often referred to as dime bags and are known to be used to package cocaine in one-half to one gram bags;
• Small metal spoon with a white powder residue, suspected to be cocaine;
• Plastic pill bottle containing 199 prescription pills known to be Oxycontin in strengths of 20 mg, 40 mg and 80 mg tablets; and
• One small black scale with white powder on it suspected to be cocaine.

14. PC Huneault located another box that contained 206 yellow tablets. Based on his experience he believed the tablets to be Cialis, 20 mg.

15. At 14:00 hours he located another box that contained five suspected debt lists (Exhibit #2) that seemed to be geared toward after-hours sales. He also found another debt list behind the office door. He shared this information with the AGCO Inspectors.

16. In response to questions, the witness outlined how debt lists are used to keep a running tab if payment is delayed.

17. At 14:18 hours the witness located a white plastic bag hanging off a hook by the door. The contents were identified as being 11 grams of marijuana.

18. At 14:25 hours a first aid kit was located on a shelf. The kit contained several bottles and two Ziploc bags containing tablets and capsules. This kit was sent to the police detachment to inventory later due to the time needed to detail the contents on the premises.

19. At 14:42 hours two bundles of cash totalling $870 in Canadian Currency were found. The bundles were located in a large wooden dresser. The top drawer held cash totalling $400, secured with a rubber band, and the second bundle contained $470, secured with a rubber band.

20. In addition to these items, four documents (Exhibit #4) were found that the witness said appeared to be payouts for a poker machine. PC Huneault did not recall seeing the machine on the premises on the day of the search but stated that a machine had been seen when working undercover.

21. At the police detachment, PC Huneault processed the contents of the first aid kit, which included the following items:

• An orange plastic pill bottle which contained 34 white round tablets; suspected to be Percocet; the bottle did not note any prescription;
• A clear, plastic pill bottle containing 157 white round tablets; a name and number was noted on the front face of the tablet. The witness was not familiar with this tablet;
• A clear plastic pill bottle with 110 round tablets, the same as the previous bottle;
• A Ziploc type bag with an apple logo containing 100 white round tablets, which were identical to the other 2 bottles;
• A clear plastic Ziploc bag containing 150 white round tablets, same as previous three;
• A clear plastic pill bottle containing five tablets, four were round and embossed with TEC and other pill round with McNeil on one side and #3 on other side;
• Orange plastic pill bottle containing 199 Oxycotin tablets of which 67 of the pills were 20 mg tablets, 100 of the pills were 40 mg tablets and 42 pills were 80 mg tablets. Eight oval shaped tablets embossed with IBU on one side and 200 on the other side;
• 14 red/white capsules, with numbers on the capsules;
• 17 clonazepam - orange round tablets (name written on tablet), this may be a brand name;
• 20 yellow, rectangular tablets;
• Another orange plastic pill bottle containing 25 round tablets, embossed with APO-30; Oxazepam.

22. All the pills were identified as TRIANON 325.

23. On cross-examination, the witness stated that he had been at the Limit Exotic Lounge five or six times while working undercover between the Fall of 2007 and early 2008. Notes of these times were made available to Detective Stewart.

24. The witness confirmed that he had not made any attempt to obtain drugs during these visits to the premises. PC Huneault stated that he had never observed Chris Valaveris involved in drug activity.

25. PC Huneault stated that he did not wear gloves during the search of the office at Limit Exotic Lounge. No fingerprints were taken.

26. Referring to Exhibit #2, the witness stated that he did not know any of the people on the list.

27. In reply the witness confirmed that the containers found in the office were not sealed.

28. PC Kim Franklin attended Limit Exotic Lounge on April 13, 2010 at 11:46 a.m.

29. After a briefing by Detective Stewart, two teams entered the premises on a warrant. PC Franklin was assigned to catalogue any findings.

30. On entry the witness observed an older male at the bar. This male was detained and arrested for possession with intent to traffic.

31. The witness stated that a battering ram was used to open the office door. No lights were on inside the room. After the door was opened, PC Franklin left the area and continued to clear the bar area.

32. Referring to Exhibit #3, the witness reviewed details of the computer template for the property report that catalogued the findings from the investigation.

33. Referring to Exhibit #2, PC Franklin stated that she suspected the items to be a debt list.

34. On cross-examination, the witness confirmed that the lights were off in the office, once the door was rammed open, the inside of the office could not be seen.

35. In response to questions, PC Franklin stated that she did not know who owned the premises.

36. Stacy Lanois, an Inspector with the Alcohol and Gaming Commission of Ontario (“AGCO”), was asked to attend Limit Exotic Lounge on the day of the search. She attended the briefing that took place at the Prescott detachment prior to attending the premises.

37. Inspector Lanois stated that she has worked in this area for three years and knows the owner, Marko Valaveris, and his son Chris Valaveris, who is the General Manager.

38. Referring to Exhibit #1, Inspector Lanois indicated the areas she searched with Inspector Workman, which included the area behind the bar and the TV area.

39. Inspector Lanois noted that the liquor licence was not posted on the wall and was partially hidden by liquor bottles on the shelf.

40. In the kitchen she noted a 750 ml bottle of Captain Morgan Rum. The contents smelled like maple syrup, not rum. A 1.1 litre bottle labelled Bacardi Rum, which smelled of vinegar and a 1.1 litre bottle labelled Weiser’s Rye were sent for testing. The lab report (Exhibit #4) on this bottle did not identify the contents but did confirm that it was not rye.

41. Inside the cooler, a bottle shaped like a baseball bat was identified as a 1 pint, 2 ounce, bottle of Coors Light beer. There was no indication that this bottle was an Ontario government issued bottle.

42. On entering the office area, the witness stated that PC Huneault was inside, seated at a desk. Inspector Workman went to the second desk to search the drawers. Inspector Workman handed Inspector Lanois receipts that were found and these items were recorded in a notebook.

43. Documents seized included:

• An LCBO receipt which did not indicate the item had been purchased under licence.
• Numerous items, including guest checks with various things written on them, indicating names and times that suggested after-hours purchases (Exhibit #2).

44. Inspector Lanois stated that there were some guest checks relating to video gaming, and these were given to the OPP officers.

45. Inspector Lanois stated that she saw a video machine on the premises when she did an inspection over a year ago.

46. Inspector Lanois stated that she did not personally speak with the Licensee, but was with Inspector Workman when the Licensee was notified of liquor infractions that included having illegal contents in liquor bottles, not having the licence visible, having liquor purchased off-licence and after-hours receipts. The Licensee was advised that some guest check receipts had been photocopied.

47. Mark Valaveris told the Inspectors that the Weiser’s bottle contained homemade wine. Inspector Lanois noted that there had been an issue with illegal container contents in the previous year.

48. On cross-examination, Inspector Lanois stated that she has been to the premises 10 or 12 times before and the liquor licence was always behind the bar. Inspector Lanois did not think she had raised a concern about the location of the licence before.

49. The witness stated that she had not seen the baseball shaped bottle of Coors Light before.

50. Detective Constable (“DC”) Cameron Stewart, has been with the OPP since October 2001.

51. Referring to Exhibit #7, DC Stewart stated that the blacked out areas protect the identity of informants.

52. Information relating to cocaine trafficking at Limit Exotic Lounge was gathered over a four year period with a number of officers involved.

53. DC Cameron stated that he did not handle all the informants. He handled two informants identified as “# 8” and “# 10” in Exhibit #7. Other officers provided information during the course of the investigation.

54. The witness was involved in the execution of the warrant of April 13, 2010, organizing the teams and attending the premises on that day.

55. Referring to Exhibit #8, he identified the manner in which the search was conducted. Team #1 went to the main floor and Team #2 went to the upper level.

56. On entering the main floor, licensed area, he saw Mark Valaveris, seated at the bar. No one else was inside.

57. The door to the office was locked and a ram was used to open the door. No one was inside and the search of the office resulted in items being photographed and recorded by officers.

58. DC Stewart returned to the main bar area and spoke to Mr. Valaveris Sr., who told the officer that he had the key for the office and gave it to DC Stewart. Mark Valaveris was arrested for possession of trafficking in cocaine.

59. He stated that Chris Valaveris was not on the premises when they arrived but was arrested later that day.

60. DC Stewart indicated that he took possession of the records of items found in the office after they had been prepared and completed by PC Franklin, the exhibit officer.

61. He stated that the drugs seized were sent for drug analysis to Health Canada according to usual and accepted reporting practice.

62. He attempted to interview two females who were on the premises, as well as Mark and Chris Valaveris. No one wished to provide a statement. One female lived upstairs and worked on the premises as a manager.

63. On cross-examination, DC Stewart stated that during the search he was not opposed or challenged by anyone on the premises.

64. In response to questions, the witness stated he could not directly relate the contents of the pencil case to Mark or Chris Valaveris. He did not find a key on the person of anyone else, other than Mr. Mark Valaveris.

65. Through extensive cross-examination questions, Detective Stewart indicated that he knew some of the twelve informants had previous convictions and could not address questions about drug records in the event they might be incriminated. Other information relating to the informants, was blacked out and not disclosed in Exhibit #7, or in testimony, due to confidentiality.

66. Detective Stewart confirmed that, in the past, undercover officers had unsuccessfully attempted to purchase cocaine from Chris Valaveris, the DJ, and a female staff person.

67. Kelly Workman has been an Inspector with the AGCO since 2008. She attended the Limit Exotic Lounge with Inspector Lanois.

68. Inspector Workman entered the premises through the front door, going to the service bar. She noted that the liquor licence was not conspicuously posted. The framed licence was on a shelf tucked between bottles, as you would shelve a book. You could see part of it, but it was not clearly displayed.

69. Inspector Workman saw the following in the kitchen:

• A Captain Morgan liquor bottle with contents that appeared to be maple syrup, having crystals in the bottom;
• A 1.14 litre bottle of Bacardi Rum, which had contents that smelled like vinegar, and.
• A 1.14 litre bottle labelled Weisers Canadian Whiskey. The liquid smelled of liquor but its colour was not consistent with this type of whiskey. The bottle was sealed and sent for testing.

70. In the cooler she saw a one pint bottle, in the shape of a baseball bat. The bottle had a US government label.

71. On entering the office with Inspector Lanois, Inspector Workman went through receipts while a police officer was working at another desk.

72. One receipt dated March 19, 2009 indicated liquor was not purchased on licence (Exhibit #2).

73. She also saw one receipt dated April 12, 2010 that referenced a poker machine. It had two columns, indicating dollar amounts and points earned. This information was brought to the attention of Detective Stewart. She stated that there was a Lucky 8 poker machine in the establishment.

74. Inspector Workman made copies of receipts (Exhibit #2) showing beer after hours. She noted tally marks that seemed to indicate the number of beer purchased after hours.

75. On checking cash register tapes, showing records of all sales, the witness noted on one roll a transaction that took place after 2:00 a.m. (Exhibit #10). On checking the cash register in the bar, the print out confirmed that it was giving accurate date and time information.

76. Inspector Workman stated she advised Mark Valaveris that liquor bottles cannot be used beyond the original content on the premises. He told her that the bottles held homemade wine and vinegar.

77. On cross-examination, Inspector Workman stated she had been inside the premises more than a dozen times. She did not take photos of the licence location when in the premises on the search warrant.

78. The Inspector could not say if she had noted a problem with the licence on previous inspections.

79. She confirmed that the Coors Light was in the original bottle and did not know how it was purchased.

80. In response to questions, the witness confirmed that some of the receipts in Exhibit #2 did not have a corresponding cash register receipt. She agreed that the time change could be a factor impacting the time on cash register receipts. She did not ask for cash register receipts for 2008.

Licensee’s Evidence

81. Gail Kinghorn has worked at Limit Exotic Lounge for four years, having been promoted through to bartender. She works full-time and part-time.

82. She stated that the poker machine was for fun and sometimes she has to reload the machine with loonies.

83. Referring to Exhibit #2, she confirmed that a collection of guest checks is in her own handwriting.

84. Albert Juby Jervis is a regular customer at the Limit Exotic Lounge, attending almost every other night. He is retired and sometimes does carpet cleaning at the premises. One time, while working upstairs, he was brought beer after working for four or five hours. He did not pay.

85. On cross-examination, Mr. Jervis stated that he normally runs a tab. He stated that the Licensee did not bring him six beers.

Reasons and Analysis

86. The Board has carefully reviewed all the evidence, exhibits and submissions as presented. The witnesses gave their evidence in a very concise and straight forward manner.

Re: Section 52 of the O.Reg

87. Evidence was received from both AGCO inspectors that the licence was located between liquor bottles on a shelf behind the bar. It was partially visible to some patrons but not posted in a conspicuous place and readily visible.

88. Although she had been in the premises a dozen times before, Inspector Workman could not recall a previous concern about the location of the licence.

89. The Board questions why photos were not taken to illustrate the manner in which the licence was positioned, at the time of the search warrant, when detailed lists and photos were being taken to be used as exhibits that related to the other allegations under consideration.

90. The Board believes that a history of previous inspections, and the specifics of the location of the licence, are pertinent when the totality of allegations are serious and the Registrar is requesting revocation of a licence.

91. However, the Board also acknowledges that the responsibility to conspicuously display a liquor licence is a requirement and a duty of the Licensee. The Inspectors were not satisfied that the license was posted appropriately and the Board accepts their evidence as presented.

92. Therefore the Board FINDS that there was a breach in the matter of section 52 of the O.Reg.

Re: Subsection 34(1) of the O.Reg

93. Mr. Jervis gave very clear evidence that he was a regular patron at Limit Exotic Lounge, attending almost every other night. He also had a casual arrangement for doing carpet cleaning. The Board accepts his evidence that he was the recipient of beer taken off-site of the licensed premises.

94. As well, in Exhibit #2, there were guest checks recording a sale of alcohol ‘to go’. On a balance of probabilities, the Board accepts the work experience and interpretation of the Registrar’s witnesses that this is indicative of liquor being removed from the premises on more than one occasion.

95. Therefore the Board FINDS that there was a breach in the matter of subsection 34(1) of the O.Reg.

Re: Subsection 31.1(1) of the O.Reg

96. The Board accepts the evidence of all parties that the contents of bottles found in the kitchen contained substances that were not originally in the bottles that would or should have been purchased under the liquor licence from a government store.

97. Both Inspector Workman and Lanois gave consistent evidence that bottles in the kitchen were found to contain maple syrup and a vinegary smelling liquid. Another bottle was sent for testing, confirming that the contents were not rye as should have been contained in the bottle.

98. In addition, both Inspectors gave the same evidence, stating that Mark Valaveris said that the Weisers bottle contained homemade wine and the other bottles contained vinegar.

99. Given the consistent evidence and analysis certificates the Board FINDS that there was a breach in the matter of subsection 31.1(1) of the O.Reg.

Re: Subsection 45(1) of the O.Reg

100. Ms Kinghorn gave evidence to the poker machine being on the premises and that she was an employee responsible for reloading the machine with loonies. She also confirmed her handwriting on the guest checks recording points earned on the poker machine.

101. Inspector Lanois indicated that she had seen a poker machine on the premises previously. Inspector Workman also gave evidence that that there was a Lucky 8 poker machine in the establishment on April 13, 2010, the day the search warrant was executed.

102. The Board accepts the consistent evidence given by these three witnesses and through the exhibits, that there was unlawful gambling on the premises.

103. The Board FINDS that there was a breach in the matter of subsection 45(1) of the O.Reg.

Re: Subsection 45(2) of the O.Reg

104. There was agreement by all parties that the drugs found on the premises during the execution of the search warrant, have been certified to be the drugs as identified in evidence as controlled drugs or substances.

105. The Board is satisfied that the drugs found in the licensed premises were controlled drugs as scheduled in the Controlled Drugs and Substances Act. The Board accepts that the cash found and the paraphernalia, such as weigh scales, in the office are all indicative of drug trafficking.

106. Licensee’s counsel presented concerns during the questioning of witnesses and in submissions about the value and credibility of the informant information received.

107. The Board agrees that this would be a concern, if there was no other evidence to consider. However, the consistency of information from these twelve informants led to the execution of a search warrant on April 13, 2010, that yielded factual evidence of controlled drugs or substances on the licensed premises.

108. Significant quantities of these substances were readily found in the office of Limit Exotic Lounge and only one person, Mark Valaveris, was found to have a key to the locked office.

109. The Board also received evidence through exhibits of guest checks that recorded debt lists. The police officers gave evidence that these lists were consistent, in their experience, with drug dealing.

110. Although it was not clear who was the person directly involved in the sale or distribution of the drugs found on the premises, it remains the responsibility of the Licensee to control and oversee all activities on the premises.

111. With the clear and undisputed evidence of controlled drugs and substances on the premises, and in the office, which is a restricted/controlled area, on the premises, the Licensee must be held responsible for permitting the sale, distribution and/or consumption of these controlled drugs or substances.

112. Therefore the Board FINDS that there was a breach in the matter of subsection 45(2) of the O.Reg.

Re: [Section 6](https://www.canlii.org/en/on/laws/stat/rso-1990-c-l19/latest/rso-1990-c-l19.html#sec6_smooth) of the [LLA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-l19/latest/rso-1990-c-l19.html)

113. The Board gave in-depth deliberation to the exhibits, authorities and all the evidence given by the witnesses, in addition to a review of the detailed submissions.

114. Given the totality of findings being made by the Board, as detailed above, and given the serious nature of findings including, but not limited to, the presence of a significant quantity of illegal drugs, and the presence of an illegal poker machine, the Board has strong and consistent evidence supporting the revocation of the liquor licence of the licence holder.

115. The matters under consideration are very serious and there is a need for both specific and general deterrence to protect the public interest. The Board believes that the management and operation of the business will not be carried on in accordance with the law and with integrity and honesty. It is not in the public interest to permit the Licensee to continue to hold a liquor licence.

Conclusion

116. Therefore, for the above reasons the Board orders the immediate revocation of liquor licence number 201939, issued to Adams Pizzeria (Prescott) Ltd. Operating as Limit Exotic Lounge (The), 147 King St West, Prescott.

DATED AT TORONTO THIS 24th DAY OF August , 2011

DAVID C. GAVSIE, CHAIR JOAN LOUGHEED, BOARD MEMBER