COURT FILE NO.: 483/07
DATE: 20080502
SUPERIOR COURT OF JUSTICE – ONTARIO
DIVISIONAL COURT - TORONTO
RE: 1313963 Ontario Limited operating as SIN CITY BAR AND EATERY v. Registrar, Alcohol and Gaming Commission of Ontario
BEFORE: Pardu, Lederman and Kiteley JJ.
COUNSEL: Harry G. Black, Q.C., counsel for the appellant
Joyce A. Taylor, counsel for the respondent
HEARD: April 29, 2008
E N D O R S E M E N T
[1] This is an appeal by the Licensee from two decisions of the Board of the Alcohol and Gaming Commission of Ontario (the “AGCO”). On June 11, 2007, the Board found that the appellant breached s. 45(1) of O. Reg 719/90 made pursuant to the Liquor Licence Act (the “Act”) by permitting drunkenness on its premises on March 12, 2005. On September 11, 2007, the Board ordered a suspension of the appellant’s licence for 10 days to be served in November 2007. That suspension order was stayed on consent pending this appeal.
[2] The appellant asks that the Board’s finding of a violation of s. 45(1) be quashed, or in the alternative, that the suspension be reduced.
[3] In the factum, the appellant argues that the appeal raises the following questions of law:
(a) the failure of the board to find that drunkenness had been permitted;
(b) the failure of the board to consider collusion by the witnesses called on behalf of the Registrar;
(c) the failure of the Board to consider the effect of the absence of notes by the witnesses called on behalf of the Registrar;
(d) the decision of the Board that the evidence of a previous finding of an infraction by the appellant was admissible;
(e) the non-disclosure by a board member of his participation in making a previous finding of an infraction against the appellant and the failure to declare a mistrial;
(f) the Board’s refusal to permit the appellant to call evidence as to the previous finding of an infraction by the appellant.
[4] At the outset of submissions, counsel abandoned (d), (e) and (f).
[5] In addition to the challenges to the Board’s finding, the appellant argued that the Board erred in imposing a suspension of 10 days.
[6] S. 11 of the Alcohol and Gaming Regulation and Public Protection Act, 1996, s.O. 1996, c.16 provides for an appeal to the Divisional Court on a question of law only. The standard of review is therefore correctness.
[7] The Registrar had served a Notice of Proposal alleging that, on October 1, 2004, the Licensee had violated section 29 of the Act by permitting alcohol to be sold or supplied to a person “who was or appeared to be intoxicated” and had violated s. 45(1) by permitting drunkenness to occur on the premises. The Board declined to make any finding regarding the events on that date.
[8] The Registrar had served a Supplementary Notice of Proposal alleging a violation of the same sections of the Act on March 12, 2005. The Board declined to make a finding that there had been a violation of s. 29 but did find that the Licensee had violated s. 45(1).
[9] S. 45(1) is as follows:
The licence holder shall not permit drunkenness, unlawful gambling or riotous, quarrelsome, violent or disorderly conduct to occur on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder. (emphasis added)
[10] Counsel for the appellant argued that before concluding that a violation had occurred, the Board had to make findings with respect to two essential elements: drunkenness and permission.
[11] On the first of those, counsel for the appellant submitted that the evidence of the undercover Inspectors showed nothing more than that the patron demonstrated “signs of intoxication”. He argued that there was no evidence of “drunkenness” and no finding by the Board of “drunkenness”. We do not agree with this submission. There was evidence as to “intoxication”. As the authority on which both counsel relied indicated[^1] “intoxicated” and “drunk” are synonymous. The Board was entitled to rely on that evidence and did so by accepting the evidence of the Inspectors “about the state of an intoxicated patron”.
[12] On the second element of the infraction, there is no finding that the Licensee “permitted” the intoxicated patron to be in the premises. Counsel for the respondent conceded that there was no direct evidence by the Inspectors that the Licensee (or its employees) knew or should have known that the patron was intoxicated. She argued that there was indirect evidence on which a finding could be made that the Licensee (or its employees) knew or should have known that the patron was intoxicated. The Inspectors were in the bar from 10:50 p.m. to 12:13 a.m. They observed the patron in a line up of people going out to the patio. The patron stood there talking loudly to other patrons. He was staggering and swaying from side to side. He had trouble walking in a straight line. Inspector Baird said that he watched the patron continuously for 5 to 8 minutes. He said the patron stood out because the bar was not busy that night. Inspector Foster gave similar evidence. He said that there were 80 to 100 people in the bar that night.
[13] Considerable evidence was given on behalf of the Registrar and on behalf of the Licensee as to the physical and staffing arrangements of the bar. The capacity was over 500 people (including the patio). There were typically 13-15 security members posted at every entrance and in every congested area. There were 7 bartenders and 3 – 4 people cleaning tables. Counsel for the respondent argued that with a relatively modest number of patrons, the staff knew or ought to have known that the patron was drunk. Accordingly, the Board was entitled to find on the evidence that the Licensee had “permitted” the patron to remain on the premises. Counsel further argued that it was not necessary that the Board specifically make a finding of “permission” because the definition of “permit” was contained in a decision of the Board to which both counsel had referred[^2] and was so well-settled that the Board need not define it nor refer to it.[^3]
[14] We are not satisfied that that evidence leads to a conclusion on the balance of probabilities that the staff of the Licensee knew or ought to have known that the patron was drunk. Taking into account the considerable number of staff, all of whom had been trained to watch for signs of intoxication, it does not necessarily follow that a patron who was observed by the Inspectors for 5 to 8 minutes would have come to the attention of the staff or should have come to the attention of the staff. The bar typically had loud music and was very noisy. A patron who was “talking loudly” to other patrons would not have been distinct. The other evidence of staggering, swaying and unable to walk a straight line is not sufficiently distinct to lead to the inference that the staff knew or should have known during that 5 to 8 minute interval that he was drunk. We do not agree with counsel for the respondent that it was open to the Board to conclude on that evidence that the Licensee “permitted” the patron to be on the premises.
[15] We agree that it was not necessary for the Board to refer to a definition of “permit”. We disagree with counsel for the respondent that the Board did not have to advert to the element of “permit”. It was one of the two essential elements of the infraction. The failure to make a finding is an error of law.
[16] Counsel for the respondent argued that in fact the Board had turned its mind to the element of “permit”. At pages 19 and 20 of the decision, the Board held as follows:
On March 12, 2005, Inspectors Foster and Baird each testified about the state of an intoxicated patron wearing a plaid shirt and jeans, drinking, or more properly, gulping a Coors Light. He exhibited several signs of intoxication – slow motor skills, unsteady on his feet, talking loudly, swaying from side to side and having trouble walking in a straight line. The patron stood out because the bar was not busy that night.
The evidence was unrefuted. The due diligence defence raised by Licensee’s counsel, as Registrar’s counsel correctly points out, is not available at the findings part of the hearing – Gordon Capital Corporation v. Ontario Securities Commission – a 1991 decision of the Ontario Divisional Court.
However, based on the unrefuted evidence of Inspectors Foster and Baird, the Board does make a finding that there was a violation of subsection 45(1) of the O.Reg. by the Licensee on march 12, 2005. [emphasis added]
[17] As is apparent from the emphasis in the evidence and in the written submissions following the hearing, the Licensee’s focus at the hearing was on due diligence. The Board clearly considered that evidence and the law related to it. However, in rejecting the due diligence defence, the Board failed to consider whether there was any evidence of “permit” which was referred to in the submissions following the hearing albeit with far less attention. The evidence of the Inspectors was unrefuted because their attendance on the night in question was covert. They did not disclose that they were present. The Licensee did not learn until approximately two weeks later that the Inspectors had been in the premises. At that point, it was impossible for the Licensee to reconstruct what had happened when thousands of patrons had visited the bar in the interval. It was incumbent on the Board to make a finding that the Licensee had permitted the drunken patron to be on the premises. A finding that due diligence did not constitute permission was insufficient. We find that the failure to make a finding that the Licensee permitted the drunken patron to be on the premises constituted an error of law. The only recourse is to set aside the finding of a violation. Given the time that has passed, the nature of the infraction, the costs of the hearing to date and the costs involved in a re-hearing, we do not order that this matter be remitted to the Board.
[18] The appellant raised two other issues, namely the failure of the Board to consider the assertion that witnesses called by the Registrar had colluded and the failure of the Board to consider the effect of the absence of notes by the Inspectors. We do not agree on either point. They are, at best, findings of mixed fact and law which are not appealable.
[19] The appellant also argued that the Board erred in imposing a suspension of 10 days. The appellant asserted that the Board gave undue weight to the finding that the appellant did not have a written policy or written instructions other than the Smart Serve course material on how employees should deal with drunk or disorderly behaviour.
[20] In view of our finding that the finding that a violation occurred cannot stand, we need not decide this issue. We note however that the decision of the Board indicates that relevant factors were considered: the prior violation (including noting the assertion by the appellant that it had only agreed to an overcrowding violation not a drunkenness violation), due diligence, training of staff, dozens of inspections since August 30, 2005 where no infraction was reported, and the financial implications. The Registrar had sought a suspension of 14 to 16 days while the appellant had argued for a warning. While the Tribunal did make reference to the lack of instructional material, the decision as to sanction was clearly made on relevant factors. We are not persuaded that the sanction is unreasonable. Had the finding of a violation been sustained, we would have been satisfied that the sanction of a suspension for 10 days was “within the realm of reasonableness” required by the Supreme Court of Canada in Dunsmuir.
[21] Had the respondent been successful, counsel would have sought costs in the amount of approximately $12700. Counsel for the appellant did not have a costs outline but indicated that if, successful, his client should recover costs in the amount of $5000. Given the costs outline provided by the respondent, the amount suggested on behalf of the appellant is reasonable.
ORDER TO GO AS FOLLOWS:
[22] The appeal is allowed. The finding by the Board in its decision dated June 11, 2007 that the Licensee had violated s. 45(1) on March 12, 2005 is set aside. The respondent shall pay costs to the appellant in the amount of $5000.
Pardu J.
Lederman J.
DATE: May 2, 2008 __________________________
Kiteley J.
[^1]: R. v K.M. [2004] O.J. No. 2724; Re Green Dolphin Restaurant [2003] O.A.G.C.D. No. 75 [^2]: Re Sand Bar [1999] O.A.G.C.D. No. 64 where the Board referred to the Black’s Law Dictionary definition of “permit” as meaning, inter alia, to suffer, allow, consent, let, to give leave or license, to acquiesce, by failure to prevent. . . the doing of an act. [^3]: R. v. Gaudet 1998 5017 (ON CA), [1998] O.J. No. 2177 O.C.A.