Registrar, Alcohol and Gaming Commission of Ontario v. 751809 Ontario Inc., 2011 CanLII 64093

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-

751809 Ontario Inc. operating as Famous Flesh Gordon’s Licensee

DECISION

Panel: Allan Higdon, Board Member S. Grace Kerr, Board Member

Decision Date: September 22, 2011 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, Dan Alakas & Scott Hutchison, Representatives 751809 Ontario Inc., Licensee: Richard Posner, Representative

Authorities

Biancofiore v. the Registrar, Motor Vehicle Dealers Act [2007] O.L.A.T.D. No. 297 R. v. Lindsay & Bonner 2005 CanLII 24240 (ON SC), [2005] O.J. No. 2870 Criminal Code of Canada, R.S.C. 1985, chapter C-45 (as amended)

Allegations

1. A hearing into Amended Notice of Proposal (NOP) number 17903, dated February 23, 2010 to revoke liquor licence number 100056 (the “licence”) issued to 751809 Ontario Inc. (the “Licensee”) operating as FAMOUS FLESH GORDON’S (the “establishment” or the “premises”), 2190 Dundas Street, London, Ontario, N5V 1R3, on the basis of an alleged violation of section 6 of the Liquor Licence Act (the “LLA” or the “Act”), was held in the City of Toronto on January 11, 12 & 13 and April 21 2011.

Decision

2. The Board DECLINES to find that clause 6(2)(d) of the LLA has been violated. Reasons follow.

Preliminary Matters

3. Preliminary discussions clarified which documents would be filed on consent.

4. On consent the Board made a witness exclusion order.

5. Mr. Robert Barletta is the sole officer, director and shareholder of the corporate Licensee. He was present for each hearing day.

6. Mr. Posner advised that no evidence would be presented on behalf of the Licensee, but the law would be argued.

7. Finally, the parties agreed that the sole issue for the Board to decide is whether or not membership in the Hell’s Angels Motorcycle Club (“HAMC” or “the Club”) by the principal of the Licensee is, in itself, sufficient to strip him of the privilege of holding a liquor licence.

Registrar’s Evidence

8. Leonard Isnor is a Detective Sergeant (“Det. Sgt.”) who has been a member of the Ontario Provincial Police (“OPP”) for 27 years. For the last 16 years he has specialized in outlaw biker enforcement. He is the co-ordinator of a program dealing with motorcycle gang organized crime, including the HAMC.

9. The status of the witness as an expert was not contested. His Expert Statement of Opinion was made Exhibit 1.

10. The C.V. of the witness was made Exhibit 2.

11. The witness reviewed the history of outlaw motorcycle gangs in Canada. The HAMC were formed in California in about 1948 and started to deal in illegal drugs in the 1950s and 1960s.

12. There are approximately 159 full patch HAMC members in Ontario as of November 2010.

13. The London chapter of the HAMC is one of 13 active chapters in the province of Ontario. A chapter requires a minimum of six members.

14. The London chapter was founded in 2003. It took a couple of attempts before it became secure.

15. The London clubhouse of the HAMC is registered to Robert Barletta, the owner of the Licensed premises.

16. There are degrees of membership in the HAMC, beginning with associate, moving up to official friend, hangaround and prospect, and finally, the highest rank for bikers – that of full patch member.

17. Det. Sgt. Isnor testified that the graduated membership structure for HAMC was designed to keep out “undesirables.” Usually it involved having to know a prospective member for a minimum of five years.

18. The rules of any HAMC chapter are strict. There are written and unwritten rules.

19. One unwritten rule is that a member “shall never give a statement to the police and shall not give information to betray the HAMC. These rules are unwritten so members of the HAMC can manage their criminal activities, while protect themselves against prosecution” (Exhibit 1, page 29).

20. The witness reviewed the many criminal offences involving members, stating that 67.2 per cent of all Ontario HAMC members have been convicted of a criminal offence (Exhibit 1, page 40).

21. The witness stated that membership in a criminal organization such as the HAMC is absolutely incompatible with the obligations required of a Licensee under the Liquor Licence Act.

22. A member of the HAMC would not co-operate with police as required of a Licensee. He would not testify regarding operation of the bar or any criminal activities within the bar.

23. In the witness’s opinion, the fundamental conflict between the obligations required of a member of the HAMC and the obligations required of a Licensee would be contrary to the public interest.

24. On cross-examination the witness acknowledged it is not a crime to be a member of the HAMC or any other criminal organization.

25. The witness stated the London Police Service initiated a volunteer program in 2001 asking that no person be admitted into a bar wearing gang colours. The program still exists and works well. Consequently, there is no intimidation in bars due to the presence of gang colours.

26. The witness stated he has known that HAMC is a pernicious organization for about 10-15 years.

27. The witness got to know the Licensee, Robert Barletta, in 2001 as a member of a motorcycle gang. He also knew at that time that Barletta owned and operated a bar.

28. The witness did not contact the AGCO with any concerns about Robert Barletta and his licensed establishment in 2001.

29. In 2001, Barletta was a “prospect” for the HAMC. He has never sought to hide his affiliation with that organization.

30. The witness stated members of the HAMC will abide by the law only when it is convenient. There is a risk of drug dealing in any bar operated by Robert Barletta.

31. Given his gang obligations, Barletta cannot give statements to police as required of all licence holders.

32. On reply the witness was asked if he felt strongly about Barletta’s membership in the HAMC. He replied he never gave it a lot of thought. He was too busy and it never crossed his mind over the past 10 years.

33. In response to the Panel, the witness stated he became aware of Barletta’s relationship with the HAMC in April 2001. Barletta was a “prospect” at that time.

34. The witness stated he was not aware of any illegal activity having taken place in Famous Flesh Gordon’s since 2001. [Registrar's Counsel stated the Registrar is not alleging that any specific criminal activity took place on the licensed establishment.]

Agreed Facts

35. This case does not involve either an initial application for, or a request for a renewal of a liquor licence. The Licensee operates a going-concern business that holds the existing Licence: the Registrar seeks a revocation of that Licence.

36. An Agreed Statement of Facts (Volume 1) was made Exhibit 4(1) and an Agreed Statement of Facts (Volume 2) was made Exhibit 4(2). From those exhibits, the following agreed facts are most pertinent:

1. The HAMC is a criminal organization as defined in s.467.1 of the Criminal Code, R.S.C. 1985, c. c-46 (as amended).

2. The London chapter of the HAMC adheres to the world, national, and provincial written and unwritten rules of the HAMC.

3. The essential characteristics and the written and unwritten rules of HAMC are as described in the evidence of Det. Sgt. Isnor and in Exhibit 1.

4. Robert Barletta became a full-patch member of the Toronto North chapter of HAMC in 2002, and was a founding member of the London HAMC chapter when it was established in 2003.

5. Robert Barletta was the President of London HAMC until at least 2008. He remains a member of London HAMC.

6. Robert Barletta has no outstanding criminal charges or any criminal record.

7. Robert Barletta has been the owner of the London HAMC clubhouse since 1983.

8. Robert Barletta is the sole officer, director and shareholder of the corporate Licensee which is the holder of the liquor licence and owner of the establishment operating as Famous Flesh Gordon’s.

9. Robert Barletta first applied for his liquor licence in April 2001. The Licence was granted on July 5, 2001.

Registrar’s Submissions

37. It is the Registrar’s position that membership per se in a criminal organization, such as Mr. Barletta’s in the HAMC, is incompatible with the obligation of a licensee to act in accordance with the law and with honesty and integrity as required by the Liquor Licence Act.

38. The Registrar maintains that the belief that Mr. Barletta, the principal of the Licensee, will not carry on business with honesty and integrity is grounded on a “reasonable” evaluation of the circumstances and on the balance of probabilities.

39. In submissions, the Registrar detailed some of Det. Sgt. Isnor’s evidence, noting especially that HAMC members must be “100 per cent devoted” to the Club, have “a good criminal network,” and be “prepared to resort to violence.”

40. The Registrar also referred to (tab #13, pg. 3, paragraph 1) his Casebook, that is, the Biancofiore decision. There is a reference in Biancofiore to Mr. Biancofiore yelling and swearing at police. Nobody has ever had their licence revoked for this type of behaviour.

41. That is not the point of why Mr. Biancofiore’s application to renew his licence as a car salesperson under the Motor Vehicle Dealers Act was refused. The real reason, the Registrar submits, was his association, in that case as in this one, with the HAMC. An additional factor was Mr. Biancofiore’s failure to disclose his activities with the Club to his licensing agency.

42. The Registrar asks the Board to take into consideration the following relevant facts. First, the London chapter of the HAMC was set up to facilitate illegal activity. Robert Barletta was President of the chapter. Also, Mr. Barletta must have known what each member of the chapter was doing. Many of them have criminal records. Further, Mr. Barletta has never repudiated the values of the Club. Finally, the underlying purpose of the organization is to break the law.

Licensee’s Submissions

43. In contrast, the Licensee argues that the essential issue is whether membership alone in a criminal organization is sufficient to revoke a liquor licence.

44. The Licensee distinguishes the case of Biancofiore from the matter at hand. Mr. Biancofiore’s salesperson’s licence was revoked because he failed to disclose he was a member of the HAMC in his license renewal application.

45. Further, the Licensee submits, Mr. Biancofiore’s membership in the HAMC was not the determining factor in refusing to renew the licence in Biancofiore. Rather, the deciding factor was the applicant’s behaviour towards police and failure to disclose previous convictions.

46. In contrast, the Licensee suggests, there has been no failure to disclose in the matter before the Board. The Licensee has never mislead or sought to hide anything. He does not have a criminal record. He does not have a history of conflict with police.

47. The Licensee also argues that the statement of the Licence Appeal Tribunal member, made in the Biancofiore decision (the Registrar’s Casebook, tab #13, pg. 7, para. 5), is problematic if taken in isolation. It reads as follows:

“The Hell’s Angels are, as found by Justice Fuerst, a criminal organization within the meaning of s. 467.1(1) of the Criminal Code, having ‘the facilitation of illicit business and criminal profit for its membership’ as primary purposes. It is reasonable to assume that members, including the Applicant while he was a member, adhere to its basic tenets, values and beliefs. These tenets, values and beliefs are incompatible with the conduct of business in accordance with the law and with integrity and honesty.”

48. Testing that statement against the facts of this case, the Licensee argues, in the within matter the lack of any evidence of incompatible behaviour is compelling. The Licensee has held a liquor licence for 10 years and there has been no impropriety.

49. One can debate abstract values but in this instance there has been no suggestion that the Licensee has conducted his business in any manner lacking honesty and integrity, according to the Licensee.

50. The Licensee further submits that it is important to note that mere membership in a criminal organization does not give rise to a reverse onus (that is, upon the Licensee). Such membership becomes relevant only when a specific offence is committed at the behest of or benefit to a criminal organization.

51. As to public perception, the Licensee questioned what the public would think of someone losing his licence because of membership in a criminal organization although there is clear indication of no wrongdoing on his part. Surely, the Licensee suggested, they would find something wrong with that.

52. The Licensee asserts that it would be a palpable injustice to strip the Licensee of the Licence, given his spotless record and the fact that this action is being taken after 10 years and nothing new has happened.

Analysis and Reasons

i. Introduction

53. This is a test case. As noted above, the Registrar alleges that the Licence should be revoked on the basis that there are reasonable grounds to believe that, based on the Licensee’s, and in particular its principal, Mr. Barletta’s, past or present conduct, he will not carry on business in accordance with the law and with honesty and integrity. As such, the Licensee is in breach of clause 6(2)(d) of the LLA, according to the Registrar.

54. More particularly, the Board has to resolve whether Mr. Barletta’s membership in the HAMC provides the reasonable grounds for the Registrar’s belief that the Licence should be revoked.

55. The onus lies upon the Registrar to prove his case on the balance of probabilities. Since the Registrar seeks the more significant remedy of revocation rather than suspension of the Licence, the evidence tendered in proof must be particularly compelling. While in the result the Licensee’s liberty will not be denied, finding the Licensee to be in violation of clause 6(2)(d) would deprive him of his livelihood or business, which is a serious matter.

ii. Background Concepts

56. In the Province of Ontario there is a qualified right to a liquor licence (subsection 6(1) of the LLA).

57. The broad foundational qualifiers necessary for the privilege of holding a liquor licence, whether upon the initial application for or subsequent renewal of, or during the course of holding a liquor licence, are set out in subsections 6(2)(a) – 6(2)(f.1) of the LLA.

58. Furthermore, the purposes of these qualifying prerequisites are multiple, but mainly they are intended to ensure that the sale and service of alcohol in this Province is in the public interest and accords with the principles of honesty and integrity, and social responsibility.

59. For the purposes of this Decision, the Board accepts the Webster’s Dictionary definition of the word, “conduct”, which is: “the act, manner, or process of carrying on.”

60. While the word, “conduct”, may be used to describe a mode or standard of personal behaviour based on moral principles, the Board believes that this is not the appropriate measure. Rather, the Licensee’s conduct must be gauged in terms of the requirements and responsibilities of the Ontario liquor laws.

iii. The Applicable Legislation

61. Clause 6(2)(d) of the LLA reads as follows:

“6(2)(d) [An applicant is entitled to be issued a licence to sell liquor except if,] 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.”

62. Also, subsection 6(3) of the LLA says that:

“6(3) Clause (2)(d) applies to the following persons:

1. The applicant.

2. An officer or director of the applicant.

3. A person who is interest in another person, as described in subsection 1(2).

4. A person having responsibility for the management or operation of the business of the applicant.”

5. Finally, subsection 15(1) of the LLA, provides that:

“15(1) The Registrar may issue a proposal to revoke or suspend a licence to sell liquor or refuse to renew such a licence for any ground under subsection 6(2), (4) or (4.1) that would disentitle the licensee to a licence if the licensee were an applicant or if the licensee has contravened this Act, the regulations or a condition of the licence.”

64. In this case, it is not contested that as subsection 6(3) applies to Mr. Barletta, as both an officer or director of the corporate Licensee and a person who has responsibility for the management or operation of the business of the licensed premises, he is subject to the provisions of clause 6(2)(d) of the LLA.

65. Also, subsection 15(1) of the LLA entitles the Registrar to seek a revocation of the Licence at times other than initial or renewal applications, such as in this case.

66. Each initial or renewal application for a Licence, or proposal to revoke an existing Licence, as the case may be, must be assessed and decided on a case-by-case basis. Thus, the Board notes at this point that in another case, with a different set of background facts, the Board might have come to a different result than it has in this case.

iv. Multi-part Analysis

67. In coming to its decision, the Board must undertake a multi-part analysis. First, it must determine whether or not the HAMC is a “criminal organization”, and specifically, whether Mr. Barletta, as the principal of the licensed establishment, was a member of that organization.

68. Next, given the Board finds that Mr. Barletta is a member of such an organization, the requirements for a finding under clause 6(2)(d) of the LLA need to be thought-out.

69. To that end, Mr. Barletta’s – and the establishment’s – “past and present conduct”, against the backdrop of his membership in the HAMC, must be assessed in order to determine whether he can “carry on business in accordance with the law” and with “honesty and integrity”.

70. Specifically, in order to strip this Licensee of its Licence, the Board must find, on the balance of probabilities and based on the evidence before it, that the requirements under clause 6(2)(d) have been compromised. The evidence must be assessed within the context of the sale and service of alcohol, and especially, in relation to the Licensee’s ability – or not – to fulfil its responsibilities as a Licensee under the Act.

71. Clause 6(2)(d) requires the Licensee to comply with two standards: “in accordance with the law” and “with honesty and integrity”. Failure to adhere to either one or the other or both constitutes a violation of this clause (Registrar of Alcohol and Gaming v. Darchris Productions Inc.).

72. As an alternative, the Board needs to determine whether there has been a material change in circumstances that disqualifies Mr. Barletta from holding a liquor licence.

73. As well, should there have been a finding that the Licensee had violated clause 6(2)(d), the Board was asked to consider whether adding conditions to the Licence, as an option to its revocation of the Licence, would address any public safety concerns or public interest matters.

74. Finally, the Licensee raised the equitable doctrine of laches as providing fundamental grounds for finding against the Registrar in this case. The Board also addresses this argument in its reasons.

75. The Board begins its multi-part analysis next.

v. Is the HAMC a “criminal organization”?

76. The Board finds that the HAMC is a “criminal organization”, and that Mr. Barletta is a member of such an organization.

77. This conclusion is supported by the relevant case law¹, the definition contained in section 467.1(1) of the Criminal Code of Canada, the evidence of Det. Sgt. Isnor, the police expert, who testified before the Board and provided his sworn Affidavit (Exhibit 1), and finally, the Agreed Statement of Facts (Exhibits 4(1) and 4(2)). Indeed, the Licensee does not challenge the Board’s conclusions set out in paragraph 76 above.

78. As the Registrar suggested, a ruling that the HAMC is a criminal organization is not a novel finding. Therefore, the basis for the Board’s conclusion in this regard does not need to be excessively detailed in this decision. In fact, Madame Justice Fuerst extensively reviewed and described the characteristics of a criminal organization such as the HAMC in the Lindsay² decision.

79. Det. Sgt. Isnor’s testimony confirmed that the same (or similar) characteristics apply to the London Chapter of the HAMC, of which Mr. Barletta is a member.

80. Summarily stated, therefore, the essential characteristics of a criminal organization, such as the HAMC, are:

a. The organization’s operational structure and tenets are sophisticated, including “a lengthy graduated process for membership, a requirement of unwavering loyalty to the club, obsessive commitment to protecting the secrecy of information, strict internal discipline over members, and anti-establishment rules.” (Lindsay, paragraph 953). [This structure helps to protect the HAMC from rivals as well as law enforcement, and facilitates the commission of criminal offences by its members (Lindsay, paragraph 953)];

b. The organization purposely encourages a reputation for violence (Lindsay, paragraph 1011); and,

c. The organization is monopolistic, attempting to control a territory, an industry or both (Lindsay, paragraph 1030).

81. Ultimately, one of the main purposes or main activities of the HAMC is to make easy the commission of serious criminal offences by its members for the financial benefit of its members (Lindsay, paragraphs 920 and 1069).

82. Det. Sgt. Isnor also detailed, both in his oral testimony and in his Affidavit (Exhibit 1, pages 16 – 48), the eight characteristics of an “outlaw motorcycle gang” (“OMG”) such as the HAMC, which is a specific type of criminal organization. These are: structure (i.e. chapters, executive and meetings), membership, club rules, colours, clubhouse, intelligence gathering, associates and criminal activities.

83. Additional noteworthy background information about OMG have been extrapolated from Det. Sgt. Isnor’s extensive evidence on point (Exhibit 1), as follows:

a. Members of the HAMC, even if not involved in a criminal activity, may be required at any time to assist another member in his criminal activities“ (page 17);

b. Candidates for membership in the HAMC must have a continuous means of financial support whether legitimate, criminal, and/or a combination of both. The HAMC seek out people who are skilled in criminal activity and who may have business savvy that would be of benefit to the organization (such as the owner/operator of a legitimate business) (page 26);

c. The HAMC have written as well as unwritten rules. One unwritten rule is that members shall never provide a statement to the police or give information to betray the Club (pages 29-30);

d. Not all associates of an OMG wear clothing that supports the OMG or attend OMG functions so as not to draw the attention of law enforcement (page 38). [Note: an “associate” is someone who may not necessarily wish to become a member of the HAMC, but is friendly with members (page 38 -39)];

e. HAMC members flaunt their colours and HAMC paraphernalia in public to intimidate rival members as well as the general public (page 33);

f. The HAMC are involved in a wide variety of criminal activities, including drug trafficking, murder, theft, possession of stolen merchandise, extortion, firearms possession and trafficking, and money laundering. 67.2% of all Ontario HA members have criminal convictions (page 40); and,

g. The HAMC represent the one-percent of society that does not abide by its rules (page 51).

84. Det. Sgt. Isnor also deposed in Exhibit 1 that Mr. Barletta has been observed [by police] to have met with Quebec HAMC members, including one South HAMC member who was arrested in Quebec for conspiracy to commit murder, murder, conspiracy to traffic controlled substances and criminal organization charges (pages 46-48).

85. The Board accepts or confirms all of this evidence in support of its conclusion that Mr. Barletta is a member of a criminal organization, the HAMC.

vi. Re-statement of the Issue

86. In essence, the Registrar is arguing that it strains credulity to maintain, on the balance of probabilities, that a licensee who is a member of a criminal organization would be considered capable or even willing to reconcile the requirements of gang membership with the notion of carrying on business in accordance with the law and the principles of honesty and integrity, as required by the Act.

87. Put simply, the issue is whether mere membership in the HAMC by the principal of the Licensee, in itself, is a sufficient reason to strip the Licensee of the privilege of holding a liquor licence.

88. In order to unpack this challenging issue, the Board begins by assessing Mr. Barletta’s “past and present conduct” with a view to determining whether his membership in the HAMC sufficiently challenges his ability to carry on his business as the operator of a licensed establishment in accordance with the law and with honesty and integrity.

vii. The Licensee’s Past and Present Conduct

89. The Registrar suggests that Mr. Barletta’s past and present conduct is compromised, using essentially the following logic:

a. Mr. Barletta is a member of a criminal organization, the HAMC.

b. The HAMC, a criminal organization, whose members are bound to each other with a view to perpetuating criminal activities. Since members of a criminal organization like the HAMC must adhere to its basic tenets, values and beliefs, the HAMC creeds are incompatible with the conduct of business in accordance with the law and with integrity and honesty. Therefore, mere membership in the HAMC should disentitle Mr. Barletta to the Licence.

c. According to the Registrar, Mr. Barletta is called upon, by virtue of being a member of the HAMC, to facilitate criminal activities, which causes the Registrar to believe that his membership in that organization is incompatible with the general objectives of having a license.

90. The Board acknowledges the potentially significant concerns raised in the Registrar’s argument, taken at face value. Given the brief backgrounder describing the HAMC as a “criminal organization”, above, it is completely understandable why the Registrar raises these worries.

91. However, upon closer examination, the Registrar’s argument does not rise above speculation, sweeping generalization and conclusions stated as facts, which is one reason why it must fail.

92. One principle of natural justice requires that decisions made in administrative law matters must be based on material evidence or sound proof. Concrete evidence outweighs speculative “probabilities” and specific evidence trumps indiscriminate indications. These concepts bind the Board in all matters that come before it.

93. Put simply, it would be wrong for the Board to agree with abstract assertions, like those set out in paragraph 89 above, absent material, supporting evidence.

94. This case is unique in that the Licensee appears, on the evidence presented, to have fulfilled his responsibilities as a Licensee for the past decade.

95. As well and problematically, the Registrar’s argument acts to reverse the onus of proving his compliance with clause 6(2)(d) to the Licensee, which is not the accepted burden of proof in administrative law matters.

96. Furthermore, unlike the decision-maker in Biancofiore, the Board does not believe it is appropriate to draw a negative inference against Mr. Barletta for not testifying in the proceedings to indicate that he does not share the HAMC values.

97. There is another important distinction between the Lindsay case and this matter. In addition to standing for the proposition that the HAMC is a criminal organization, Lindsay considered, and upheld, the constitutionality of the Criminal Code of Canada provisions dealing with crimes committed by criminal organizations. In contrast, this matter involves regulatory law and the considerations to be made by this administrative law tribunal are distinctly different than in Lindsay.

98. And while the Board is disconcerted by what the HAMC clearly entails and what its members are required to do, and while nothing in this Decision should be taken as condoning this organization in any manner, it begs the question of what the Board is required to review when deciding whether to revoke a license, and in particular, this Licence.

99. In essence, the requirements of clause 6(2)(d) of the Act address the governability of a potential or existing licensee. What has to be proved by the Registrar is that the Licensee is ungovernable as the holder of a liquor licence.

100. Importantly, mere membership in a criminal organization, in itself, is not a criminal offence. Thus, the Registrar must substantiate the (alleged) criminal activity undertaken by the Licensee in order to invoke the “past conduct” provisions.

101. And while the evidence confirms that several other members of the London Chapter possess criminal records indicative of their engagement in criminal activities, Mr. Barletta does not.

102. Given that Mr. Barletta once was President of the London Chapter of the HAMC, the Registrar argues, he would know (or have known) what each member was doing: several of Mr. Barletta’s HAMC associates have extensive criminal records incurred over the time Mr. Barletta has been the principal of the corporate Licensee. Furthermore, as a member of, and one-time President, his role would have been to participate in and facilitate the extension of the drug trade in the London area.

103. There is no dispute that Mr. Barletta owned the London HAMC clubhouse until it was seized by court order. It is also not denied that at one time Mr. Barletta was President of the London Chapter.

104. The Board agrees that it is likely, given how criminal organizations such as the HAMC operate, that Mr. Barletta as President of that Chapter would have known about the criminal activities of his fellow members (e.g. serious drug-related offences, property-related offences, and so on).

105. The Board disagrees that knowing the activities that his fellow members were engaged in, and allowing them to occur, went to the heart of Mr. Barletta’s integrity, as the Registrar argued. Even outside of criminal organizations, people may know that a close friend and relation has engaged in an illegal act yet keep their own good counsel. In other words, this kind of behaviour, alone, is insufficient to indict one’s integrity.

106. Besides, the evidence shows that the authorities, such as Det. Sgt. Isnor and the Biker Enforcement Unit, also knew about, and were following what the London Chapter members were engaged in. And all the while, Mr. Barletta was carrying on business under the Licence, without apparent incident and without interference by the authorities.

107. The Registrar made additional arguments addressing the issue of the Licensee’s manageability, as follows:

a. Licensed establishments that are controlled by criminal organizations provide settings for violent behaviour;

b. If hostilities were to erupt in the Licensee’s establishment, Mr. Barletta would not report the matter or call police about it. Alternatively, if quarrelsome, violent or disorderly conduct occurred on the premises and was reported to police by patrons, Mr. Barletta would not co-operate with the police and/or AGCO inspectors in their investigation;

c. The strict adherence of OMG members to the use of violence to back up criminal activities poses too great a danger to the public; and,

d. A HAMC controlled liquor licensed establishment would create an environment that would intimidate law enforcement officials and prevent them from performing their duty.

108. The Board does not find these arguments persuasive. Again, the Registrar’s arguments reflect little more than generalized concerns and conjecture.

109. First, no evidence was tendered to show that the establishment in question has had any issues with violence as suggested in subparagraphs 107 a., b. and c., above.

110. Moreover, as a licence holder – and in order to maintain the Licence in good-standing – Mr. Barletta is bound to uphold the LLA and its regulations. This includes a positive obligation not to obstruct as well as to facilitate inspections relevant to the Licence, amongst other things. Should Mr. Barletta fail to act accordingly, the Registrar has remedies under the Act.

111. Though, based on the evidence regarding the HAMC written and unwritten rules, Mr. Barletta would be unlikely to give a statement to the police to betray another HAMC member, insofar as meeting the spectre of his obligations and responsibilities under the LLA and the regulations, there is no indication that in the past Mr. Barletta has not been able to, and in the future, cannot be counted upon to do so. Indeed, it is in Mr. Barletta’s interests to be a proactive and dependable Licensee.

112. In addition, the Board considers that police and liquor enforcement personnel have all the support, training, and equipment required to enforce the law in any licensed establishment located in the province of Ontario, including this establishment.

113. There is no evidence to suggest that the police and/or AGCO inspectors are incapable of fulfilling their statutory duties in relation to this Licence holder. Logically speaking, the readily identifiable nature of the HAMC members could in fact make enforcement easier, not more difficult for the authorities.

114. As a result, the Board concludes that the officials are capable of enforcing laws at the Licensee’s place of business.

115. Another way of describing the Registrar’s compelling concern is that there will be a spill-over or melding of Mr. Barletta’s HAMC credos and behaviour into his behaviour as a Licensee. The Registrar points out that, in the Lindsay case, for example, HAMC members favoured their member brethren over their personal family members. As such, why wouldn’t Mr. Barletta put his HAMC duties over those of his business?

116. While this point is troubling, no doubt, a problem with this argument, in the Board’s view, is that it cannot – and believes that it should not – separate Mr. Barletta’s history as a Licensee from the determination of whether it is incompatible for the Licensee to comply both with the LLA and the regulations and his HAMC credos.

117. Mr. Barletta’s behaviour, however, is quite dissimilar from the specific acts of impropriety that existed in the Biancofiore (discussed further, below) and the Lindsay cases, and influenced their outcomes.

118. The following material evidence, relevant to the Licensee’s past and present conduct, shows that it is (and has been) possible for this particular Licensee, a member of the HAMC, to have “worn both hats” and operated a legitimate licensed business for the past 10 years.

119. As noted in paragraph 36(6) above, Mr. Barletta has no criminal record.

120. There is no record of infractions under the Liquor Licence Act although Mr. Barletta has held a liquor licence since July 2001.

121. The Board was presented with no evidence to doubt that Mr. Barletta has submitted all required taxes and documentation, maintained a lawful establishment, conducted business with honesty and integrity and has fulfilled all the obligations required of a licensee.

122. The Licence has been renewed by the AGCO “probably 3 times”, according to the Registrar, since it was initially granted in 2001. In the licence renewal process, the licensee provides a personal history review and the history of infractions (if any) relating to the licensed premises is reviewed.

123. Mr. Barletta has never hidden his HAMC affiliation since first applying to be a licence holder.

124. It is not alleged that Mr. Barletta lied to the AGCO, in either his initial or renewal applications.

125. The impetus for the Registrar to issue an NOP in September 2009, was the court final ruling, approximately 7 weeks earlier, that the HAMC is a criminal organization (that is, based on the Supreme Court of Canada’s (“SCC”) refusal of leave to appeal the Ontario Court of Appeal’s ruling in the Lindsay matter, in particular).

126. There was no legal impediment to the Registrar raising his concerns before then.

127. During the entire time (that is, for approximately 10 years) Mr. Barletta has been the holder of a liquor licence the police showed no interest in his status as a licensee. [Though not specifically addressed in evidence, it nonetheless defies logic to believe that this establishment has not been watched over, and Mr. Barletta’s activities not been monitored, by police during this time.]

128. In fact, Det. Sgt. Isnor testified he was too busy with other responsibilities during the past decade to concern himself with Mr. Barletta’s liquor licence, despite knowing that he was a member of the HAMC during all that time.

129. Except in relation to his becoming a witness at this hearing, Det. Sgt. Isnor, who had in-depth knowledge of the affiliations of this Licensee since at least 2001 and who followed the London Chapter and its members’ (including Mr. Barletta’s) activities for almost the entire time Mr. Barletta was a licence holder, never once contacted the AGCO to make known the serious apprehensions he expressed in his viva voce and affidavit evidence.

130. The foregoing material, unambiguous evidence is essentially uncontested or uncontroverted.

131. The Board can find nothing in this significant evidence to call into question either Mr. Barletta’s past conduct or his present, ongoing conduct as a Licensee. Neither does anything in this evidence suggest that his ability to carry on a licensed business in accordance with his responsibilities under the law has been impugned by his membership in the HAMC.

132. The foregoing facts also serve to distinguish this case from the Biancofiore decision.

133. Specifically, the decision-maker in Biancofiore says, at page 13, “The issue in this case is whether the membership in the [HAMC] when coupled with failure to make full disclosure on his application, constitutes reasonable grounds for the Registrar to refuse (Mr. Biancofiore’s) registration” (emphasis added).

134. In stark contrast to Mr. Barletta, Mr. Biancofiore misled the licensing agency in his application for a motor vehicle salesperson’s licence by failing to disclose significant information.

135. Also, unlike Mr. Barletta, Mr. Biancofiore had a criminal record. In other words, in Biancofiore the applicant had shown as well his disregard and disrespect for the law.

136. Mr. Biancofiore’s conduct demonstrated failures both in his honesty and integrity and in his ability to act lawfully. This is not the evidence before the Board as regards this Licensee.

137. Mr. Barletta’s/the Licensee’s past and present conduct must be considered as a whole in order to determine whether there are reasonable grounds for the Board to believe that he will not, if continued to be licensed, carry on business in accordance with the law and with honesty and integrity.

138. Here, where there is not a hint of impropriety on Mr. Barletta’s part in operating the licensed establishment, it would be improper for the Board to conclude that there is a risk of non-compliance such as would justify the revocation of the Licence. The evidence proves that Mr. Barletta is conducting his establishment’s business in the fashion as is required by the regulatory laws, despite his membership in the HAMC.

139. Put differently, the Board believes that this Licensee has not shown himself to be ungovernable as the holder of a liquor licence. As such, the Registrar has also not established that the Licensee presents a risk to the public, its interest or its safety.

viii. Material Change in Circumstances

140. Alternatively, the Board must also determine whether there has been a material change warranting the revocation of the Licence mid-stream.

141. In this regard, the Registrar candidly says that he is not asking the Board to find as a material change that there has been any criminal activity on Mr. Barletta’s part.

142. Rather, in the Registrar’s submission, the “change” is in the decisions of the courts in the Lindsay matter, which have worked their way up the ladder to the SCC, and now provide the legal framework to interpret the conduct of the Licensee in relation to the organization he belongs to. If the courts had not pronounced on criminal organizations the Registrar would not be proceeding.

143. The Licensee, in turn, argues that no concrete evidence was presented to the Board of any changes in circumstance that would justify the revocation of this Licence: instead, the premises continues to operate within the law and under the Act as it has done for the past decade.

144. Also, in the Licensee’s submission, the SCC’s declaration that a group, such as the HAMC, is a criminal organization is not a substantive change in the law. The manifest bases of such groups, as well as the law enforcement issues, have been known to the police, and presumably to the AGCO also, for years.

145. As well, more specifically, the Board finds that, factually, nothing has changed in this case and believes that it would be necessary to show such a change, in conjunction with the change in the law – if indeed there has been one – in order to dispossess the Licensee of its Licence.

146. In other words, there must be material evidence of some change going beyond mere membership in the HAMC, especially when that membership has been known to the authorities for a long time, such as in this case.

ix. Conditions

147. The scheme of risk-based regulation in Ontario enables the Board to impose conditions on a liquor licence and on the premises in respect of which the licence is issued (subsection 8.1(2) of the LLA). To that end, the Board must consider the risk to the public, public safety, the public interest and the risk of non-compliance with the Act and the regulations by the holder of the licence (subsection 8.1(1) of the Act).

148. Therefore, if the Board is wrong in its declining to find that the Licensee has breached the provisions of clause 6(2)(d) of the Act, it must also reflect on whether grafting conditions to the Licence would address the identified risk.

149. According to Det. Sgt. Isnor, the main risk associated with Mr. Barletta’s operation of the Licensed establishment is that as a member of the HAMC he will permit criminal activities to take place there.

150. In the Registrar’s submission, no conditions would address the public’s concern. Furthermore, in the Registrar’s view, risk-based licensing is intended to address future problems; here is a problem that exists and would continue to exist notwithstanding the imposition of conditions to the Licence.

151. Also, the Registrar points to the Biancofiore decision, in which it was held that the imposition of conditions would not be of assistance because the HAMC do not or would not adhere to them if it did not suit their purposes, which are to not act according to the law.

152. If the Board is inclined to order that certain conditions attach to the Licence, the Registrar proposes that they include a requirement that Mr. Barletta quit the HAMC, renounce its values, and refuse to associate with the HAMC. This said, the Registrar argues that it would be impossible to enforce such conditions.

153. In turn, the Licensee points to Exhibit 1 wherein Det. Sgt. Isnor deposed that problems arise when OMG members display their gang clothing and colours. Hence, (voluntary) ‘no gang colours, no gang clothing’ programs, such as the one operating in Barrie, Ontario, have proven very successful in reducing drug trafficking from occurring in licensed establishments (Exhibit 1, page 52).

154. Further, should the Licensee choose not to comply with any of the conditions imposed on the Licence, law enforcement officials can act to address the non-compliance and could possibly shut down the business, in the Licensee’s submission.

155. While the Licensee does not believe that conditions should be imposed, absent evidence of specific acts of impropriety, to the extent the risk identified above exists, it can be eliminated entirely by requiring it to implement a “no gang colours, no gang clothing” program and by prohibiting known members of criminal organizations from entering the establishment.

156. Additionally, to ensure compliance with the foregoing (potential) conditions, the Licensee could be required to install and maintain a 24-hour video-surveillance system and to allow the authorities to view video footage from it, as required.

157. The Board agrees that the regulation of the sales and service of alcoholic beverages in Ontario has changed its primary focus from ‘enforcement’ to ‘compliance’, in the last several years. This means that in the licensing process the likely risks of non-compliance by a potential or existing licensee are identified, and may be minimized by adding risk-based conditions, which are individualized to the licensee.

158. The risk-based conditions provide a preventative, as well as remedial, compliance tool.

159. Under the Act, conditions may be consented to by the licensee, or imposed by the Registrar either upon initial application or further to a request to review a licence.

160. Once imposed, conditions can only be lifted in the event of a change in circumstances. Therefore, conditions should be imposed if clearly needed and only to the extent needed to address the identified risk(s).

161. In this case, the Board agrees that if the risk identified by Det. Sgt. Isnor exists in this case, which it has not found, that risk would likely be minimized by adding the 3 conditions to the Licence as suggested by the Licensee.

162. The conditions should be readily enforceable by the authorities. The evidence indicates that the ‘no gang colours, no gang clothing’ programs are effective.

163. And finally, the proposed conditions seem reasonable in all of the circumstances of this case. In addition, they meet the goals enunciated in subsection 8.1(1) of the Act: they address the identified concern related to the establishment operated by this Licensee that might pose a risk to the public and its safety and interest and would provide sufficient assurance that the Licensee’s conduct would meet the standards required by the Act and the regulations.

x. The ‘Laches’ Argument

164. Before concluding its reasons, the Board must deal with the “laches” argument, raised by the Licensee in its defense.

165. Specifically, the Licensee submits that the Registrar had actual or constructive knowledge of Mr. Barletta’s membership in the HAMC for 10 years now; yet, the Registrar delayed until 2009 before bringing its proposal to revoke the Licence. The remedy now sought could have been asked for years ago.

166. Thus, the Registrar has failed or neglected to do something that it should have done at a proper time. The Licensee referred to the situation in this case as “textbook acquiescence.”

167. Mr. Barletta has relied, to his detriment, upon the Registrar’s acquiescence. His business, to which he has devoted time, energy and financial resources, would be destroyed if the Licence were now revoked.

168. For these reasons, and since there is no evidence the Licensee has committed either a criminal or a regulatory offence, the Licensee pleads for the Board to hold that the equitable doctrine of “laches” applies as against the Registrar.

169. In turn, the Registrar argues that the legal process, culminating in the court’s determination that the HAMC is a criminal organization, was spread over years, commencing in 2005. This means that there was no definitive decision on “criminal organizations” when the Licence was first obtained and it was reasonable and prudent for the Registrar to wait until one was made.

170. As such, there was no neglect or acquiescence, according to the Registrar.

171. Finally, the Registrar suggests that no harm would be caused to the Licensee in the event of a license revocation. The value of Mr. Barletta’s business can be converted, and other venues are available to him to relieve any shortfalls.

172. In the Board’s view, this is not a proper case to uphold the argument against the Registrar that is made in equity.

173. The equitable doctrine of laches requires an unreasonable delay by a party in pursuing a claim. Further, it implies that a defendant’s circumstances have changed substantially (or the defendant has changed its position for the worse) as a result of the delay (or acquiescence) that it is no longer just to grant the party’s claim.

174. As noted early in this decision, holding a liquor licence is a qualified right in Ontario. Also, by virtue of the LLA, not only the granting and renewal of a licence, but also the continued holding of one, may be subject to review by the Board at the Registrar’s behest.

175. Acquiescence requires acceptance or tacit or passive compliance by a party in pursuing its rights. However, broadly-speaking, the Registrar is legislatively authorized to ask for sanctions against a license at any time. This is in the public’s interest.

176. The corresponding protection to licensees or balance to that broad right is that, for the Registrar to succeed in such a review, the alleged violation of the liquor regulatory legislation must always be proved on the balance of probabilities.

177. Therefore, it was quite proper for the Registrar to seek a review of the Licence at this time, despite the length of time the Licence has been held without incident and even though it may not have been necessary for the Registrar to await the court’s rulings before proceeding against this Licensee.

178. This is not to say that the equitable defense of laches could never be available to a Licensee. However, it would require stronger evidence of acquiescence by the Registrar and corresponding detriment or harm to a licensee than exists in this case.

xi. Summary

179. The Board concludes from the evidence, and particularly from the lack of concern by either the police or the AGCO over many years, that neither of them considered the fact that Mr. Barletta held the Licence to have any priority as a matter of public safety or to be an issue that would compromise public confidence in the administration of the Liquor Licence Act.

180. The Registrar raised an apprehension about the public’s (negative) perception of a Board’s decision in favour of the Licensee. The Board believes, however, that even if some members of the public might feel affronted or worried that someone, like Mr. Barletta, who is a HAMC member can also be allowed to retain his liquor licence, that is not the Board’s concern or responsibility.

181. More important to the public’s perception and maintenance of its faith in the integrity of the administrative process is that the evidence before the Board is scrutinized in relation to each particular licensee, that personal sensitivities do not colour a Board’s decision, and that the Board decides each matter in accordance with the law.

182. That said, this decision must not be taken in any way to mean or suggest that the Board endorses, or approves of, the HAMC or membership in the Club. Rather, on the facts of this case and for the reasons set out above, the Board concludes that it would be an injustice to strip Mr. Barletta of the Licence on his record.

Conclusion

183. For the above reasons, the Board DECLINES to revoke liquor licence number 100056 issued to 751809 Ontario Inc. (the “Licensee”) operating as FAMOUS FLESH GORDON’S.

DATED AT TORONTO THIS 22nd DAY OF September , 2011

ALLAN HIGDON, BOARD MEMBER S. GRACE KERR, BOARD MEMBER

Footnotes

1. 1Her Majesty the Queen v. Lindsay [2009] S.C.C.A. No. 540 (leave to appeal dismissed); Her Majesty the Queen v. Lindsay, 2009 ONCA 532; R. v. Lindsay & Bonner 2005 CanLII 24240 (ON SC), [2005] O.J. No. 2870; R. v. Lindsay 2005 CanLII 479 (ON SC), [2005] O.J. No. 61
2. 2R. v. Lindsay 2005 CanLII 24240 (ON SC), [2005] O.J. No. 2870