COURT FILE NO.: DC-08-00000029-0000

DATE: 20090607

SUPERIOR COURT OF JUSTICE - ONTARIO

(DIVISIONAL COURT)

RE: REJEANNE’S BAR AND GRILL LTD.

o/a REJEANNE’S BAR AND GRILL

Appellant

• and -

THE REGISTRAR OF THE ALCOHOL AND

GAMING COMMISSION OF ONTARIO

Respondent

BEFORE: CARNWATH, MATLOW & R. GORDON JJ.

COUNSEL: Eugene J. Bhattacharya, for the Appellant

Phillip Morris, for the Respondent

HEARD AT BRAMPTON: May 25, 2009

E N D O R S E M E N T

CARNWATH J.:

[1] Rejeanne’s Bar and Grill (“the appellant/licencee”) appeals two decisions of the Board of the Alcohol and Gaming Commission of Ontario (“the Board”):

• the March 4, 2008 finding that that the licencee breached s. 45(1) of O. Reg. 719/90 made pursuant to the Liquor Licence Act, R.S.O. 1990, c. L. 19 (“the Act”) by permitting drunkenness on its premises

• the April 3, 2008 order suspending the licencee’s licence for ten days.

[2] The licencee claims the Board made the following errors:

a) finding that the individual was a “patron”;

b) failing to consider the licencee’s exercise of due diligence;

c) failing to do a further investigation; and,

d) misapprehending the evidence and making findings of fact unsupported by the evidence.

BACKGROUND

[3] Shortly after midnight on April 21, 2007, Alcohol and Gaming Commission Inspector Stephen Hetherington (“the Inspector”) entered the licencee’s premises for a routine liquor inspection. He immediately observed a male swaying and leaning against a wall near the pool tables. The Inspector spoke to the individual and then went to the bar and identified himself to the manager, Rick Naismith (“Naismith”). He advised Naismith there was a potentially intoxicated person in the bar and pointed out the individual to him. Naismith advised the Inspector that this individual was “done”. He then stated, “After he finishes this game, he’s out of here”. The Inspector told Naismith that he would be submitting a report on the incident and left the premises.

[4] Apparently, the individual finished his game of pool and then left the premises without incident.

THE BOARD HEARING

(a) The Registrar’s Evidence

[5] Upon speaking to the individual by the pool tables, the Inspector noted that his eyes were bloodshot and that he could smell beer on his breath. The man placed his hand on the Inspector’s shoulder to steady himself. In cross-examination, the Inspector stated the man’s speech was slurred.

[6] When the Inspector approached Naismith and pointed out the man, he noted that the individual was unsteady and stumbling while playing pool. Naismith did not deny that the individual was intoxicated. The Inspector did not see the man being served alcohol or beer or drinking. He spoke to no other staff member.

(b) The Licencee’s Evidence

[7] Naismith has worked as a bartender and server at the licencee’s establishment for fifteen years. He completed the course required to serve liquor. When approached by the Inspector, Naismith told him that the man playing pool was “done” and that he would be asked to leave as soon as his game was finished. Naismith approached the man and told him that he would have to leave when he had finished his game.

[8] Naismith did not think the individual was drunk. He had not seen him stumble or be unsteady. In cross-examination, he stated that the individual had been into the bar before and since the incident. He thought the individual’s strong Newfoundland accent could have been confused with slurred speech.

(c) The Board’s Decision

[9] The Board found the Inspector’s evidence to be credible, consistent and based on direct interaction with the individual. Naismith could have raised the issue of whether the man was intoxicated at the time and further inquiry could have been made at that point. The Board concluded that the man was drunk in the establishment of the licencee.

[10] In imposing a ten-day suspension, the Board noted the licencee’s history of violations under the Act, including a seven-day suspension in 2007. However, the Board also noted that the licencee was co-operative once the individual was pointed out. It concluded a sanction was necessary for general and specific deterrence since the licencee needed to be more diligent in respect of the obligations under the Act.

STANDARD OF REVIEW

[11] The two appeals are brought pursuant to s. 11 of the Alcohol and Gaming Regulation and Public Protection Act, 1996, S.O. 1996, c. 26, which provides that an appeal may be made on a question of law only. The standard of review for the Board’s findings is correctness and the standard for penalties is reasonableness (see: 1166134 Ontario Inc. v. Ontario (Alcohol and Gaming Commission), [2006] O.J. No. 2567 (Div. Ct.)).

ANALYSIS

[12] The licencee submits the Board erred in finding that the individual was a “patron”. It argues there was no evidence the man was served or drank any alcohol on the premises. There was no evidence as to how long the man was there before he was seen by the Inspector. When first seen, the man was wearing a coat which he subsequently took off.

[13] I reject this submission. The word “patron” does not appear in s. 45(1) of the Act. The subsection prohibits permitting drunkenness on the premises and is not confined to patrons. Sections 29 and 30(4) of the Act require proof of service or consumption, respectively. This requirement is missing in s. 45(1), which prohibits permitting drunkenness on the premises, not the sale or consumption of liquor to an intoxicated person (see: 981034 Ontario Inc. Operating as GT’s Roadhouse and Restaurant v. Ontario Alcohol and Gaming Commission, [2009] O.J. No. 1553). In the circumstances of the case, Naismith knew or ought to have known the individual was intoxicated.

[14] The licencee submits the Board should have considered whether it exercised due diligence. I reject this submission. Due diligence is not a defence in matters before the Alcohol and Gaming Commission. In Shooters 222 Restaurant Ltd. v. Ontario (Alcohol and Gaming Commission), [2004] O.J. No. 5595 (Div. Ct.), Cunningham, A.C.J.S.C.J. concluded, at paras. 1-2:

As to the submissions that the defence of due diligence ought to be available at the liability stage of proceedings before the Board, we are of the view that the issue was fully determined in Gordon Capital v. OSC (1991), 1 Admin. L.R. (2d) 199, which considered R. v. Wigglesworth, [1987] 2 S.C.R. 541, and the clear distinction between Criminal/quasi criminal offences and proceedings to regulate the conduct of those licensed to carry on business.

In the present case, no licensee is thus charged with an offence. Having voluntarily entered into a regulatory scheme, the main purpose of which is to maintain standards of conduct and regulate conduct, the defence of due diligence, at the liability stage, is not available. This has been expressed in numerous Divisional Court decisions dealing with proceedings under the C.C.A.

[15] The licencee submits the Board erred in finding Naismith should have investigated the allegation about the man’s intoxication. I reject this submission. No obligation was placed on Naismith. Had he raised any issues as to intoxication, the Inspector could have carried out further observation and inquiry. The Inspector had indicated to Naismith there was an intoxicated patron on the premises and that a report would be submitted. The Board was entitled to draw a negative inference of fact from the failure of Naismith to say anything to the Inspector at the time.

[16] The appellant submits the Board misapprehended the evidence and made findings of fact unsupported by the evidence. I find no merit in this submission. The Board made findings of fact which it was entitled to make on the evidence before it. The submission is an attempt to have this Court substitute findings of fact for those made by the Board.

THE PENALTY IMPOSED

[17] I find the penalty imposed to be reasonable in all the circumstances.

[18] The appeals are dismissed. The parties have seven days to advise the Divisional Court at Brampton that they have reached an agreement on costs, failing which they have a further fifteen days to make brief written submissions as to costs to be forwarded to the Divisional Court office at Brampton.

CARNWATH J.

R. GORDON J.

MATLOW, J.: (Dissenting)

[19] With respect, I am unable to agree with the disposition of the majority. I would allow the appeal and set aside the finding of the Board that the appellant violated s. 45 (1) of O. Reg. 719/90 made pursuant to the Liquor Licence Act, R.S.O. 1990, c. L. 19 and the suspension of the appellant’s licensee’s license by the Board. I would further invite written submissions with respect to costs.

[20] Section 45 (1) of the Regulation reads as follows;

The license holder shall not permit drunkenness, unlawful gambling or riotous, quarrelsome, violent or disorderly conduct to occur in the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the license holder.

[21] In the context of the case at bar, the essence of the allegation against the appellant, found proven, is that it permitted the drunkenness of the male person found to be a patron.

[22] In paragraph 19 of the Board’s Decision, after referring to the evidence, the Board stated as follows;

In these circumstances, the Board prefers the evidence of Inspector Hetherington and finds, on a balance of probabilities, the male patron was drunk in the establishment.

[23] The Board continued in paragraph 20 to state its conclusion as follows;

Therefore, the Board FINDS that there was a breach of subsection 45 (1) of Ontario Regulation 719/90 under the Liquor Licence Act.

[24] These extracts reveal that the Board was of the view that, merely because “the male person was drunk in the establishment”, it necessarily followed that there was a breach of the Regulation. It made no reference whatsoever to the requirement of “permitting” which was an essential ingredient of the violation alleged.

[25] It is my respectful view that, by this omission, the Board fell into reversible error of law and its disposition cannot stand. It cannot be saved by reason only of the fact that, after the inspector’s intervention, Naismith, the bartender, allowed the male person to complete his game of pool before he left the establishment. This very reasonable approach, one that avoided creating any potentially explosive confrontation “where the patrons were neither riotous, quarrelsome, violent or disorderly”, was similar to that countenanced by the Board, differently constituted, in Re Bikini Bob’s Inc. 2007 15741. In that case the Board, in addressing the issue, stated as ,follows at page 6;

The Board believes, that by cutting off the Rowcliffes when they showed signs of drunkenness, but allowing them to remaining until they could return home safely, was both prudent and in keeping with subsection 45 (1).

[26] The law relating to section 45 (1) of the Regulation was recently considered by the Court of Appeal in 1213963 Ontario Ltd. (c.o.b. Sin City Bar and Eatery) v Ontario (Alcohol and Gaming Commission), [2009] O.J. No. 1553 (Released on April 20, 2009]. The endorsement of the Court can, in my view, be regarded as a restatement of the law, differing in many respects from previous judgments, some of which were cited by counsel before this Court. Some of those relevant to the case at bar are contained in the following extracts;

2. The prohibition in the regulation has two components. They are;

• drunkenness on the premises; and

• permitting that drunkenness

3. In our view, permitting drunkenness on the premises requires proof that the licensee knew, or ought to have known of the drunkenness on the premises. That determination, of course, must be made in all the circumstances and, in particular, in the context of the various obligations and duties placed on the licensee b the relevant legislation and regulations: see The Queen v Sault Ste. Marie, [1978] 2 S.C.R. 1299; The Queen v Royal Canadian Legion, [1971] 3 O.R. 552 at 559 (C.A.).

4. While there are cases from the Board that suggest that “permit” means simply failing to prevent and is established once drunkenness on the premises is shown to have occurred, there are also cases from the Board that are consistent with the interpretation that we hold is the correct one: e.g. see 1577107 Ontario Inc. (c.o.b. Place Bar & Grill) (Re), [2008] O.A.G.C.D. No. 405. See also Horseshoe Valley Resort Ltd. V Alcohol and Gaming Commission, [2005] O/J. No. 5895 (Ont. Div. Ct.).

5. The Divisional Court held that the Board erred in law by failing to make a finding on the question of whether the licensee permitted drunkenness on the premises (see para. 15). We have reviewed the Board’s reasons. We are satisfied that the Board applied the wrong interpretation of the word “permits” in making its finding against the licensee. In our view, the Board did not consider whether the licensee knew or ought to have known on the premises. (Balance of paragraph not reproduced.)

[27] The undisputed evidence and the findings of fact in the case at a bar required a further careful and correct analysis by the Board with respect to whether or not the required “permitting” had been proven. That analysis was not done. The error referred to in paragraph 5 of the Court of Appeal’s endorsement in Sin City is the same as the error made by the Board in the case at bar and now upheld by the majority. The disposition of this appeal should, therefore, also be the same.

MATLOW, J.

Released: 20090619