Licence Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2013-08-12

FILE: 7686/LLA

CASE NAME: 7686 v. Registrar of Alcohol and Gaming

Appeal from the Notice of Proposal of the Registrar of Alcohol and Gaming under the Liquor Licence Act, R.S.O. 1990, c. L. 19 - to Revoke a Licence

2203099 Ontario Ltd. o/a Jax Bar & Grill Applicant

-and-

Registrar of Alcohol and Gaming Respondent

ORDER

ADJUDICATOR: D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Applicants: Douglas Burns, Counsel

For the Respondent: Phillip Morris, Counsel

Heard in Hamilton: May 21 - 24, 2013

ORDER

1The Applicant, 2203099 Ontario Ltd. o/a Jax Bar & Grill (“Jax”) has been operating under its current management since 2009. It has done so without incident or disciplinary action by the Registrar. At a hearing before this Tribunal in March 2012, an individual named George Chrisanthopoulos (“GC”) applied to have the licence transferred to him and was denied (Ex 3, 6889 v. Registrar of Alcohol and Gaming, 2012 CanLII 19469 (ON LAT)). In denying the transfer, the Tribunal stated:

There is conflicting evidence on the future role of the father in the business and the Tribunal can only conclude that the family dynamics are unlikely to change. Although the licensee and the Applicant’s father attended the hearing, they were not called as witnesses, leaving the Tribunal unable to clarify or confirm the Applicant’s evidence.

2The current licensee, Pamela Llewellyn, is the spouse of George Chrisanthopoulos’s father, Ioanis (John) Chrisanthopoulos (“JC”). The concern with his involvement in managing Jax is that JC has an extensive criminal record stretching back over a number of decades with offences that include drug trafficking, violence and extortion. By his own admission he has spent 14 of the last 30 years incarcerated. The Registrar is concerned that if JC is involved in the management of Jax, it will not carry on business in accordance with law and with integrity and honesty. The Registrar is also concerned that the failure to mention the involvement of JC in the management of Jax means that the transfer of the licence to Ms Llewellyn in 2009 was achieved under false pretences. Had JC’s full involvement been disclosed, the Registrar would not have approved the transfer. On that basis, the Registrar issued a Notice of Proposal to Revoke the Applicant’s licence.

3The family dynamic reaches even further. The building is owned by a corporation controlled by JC’s mother. It appears to be managed to some extent by JC’s brother and sister-in-law. Indeed, the only written documentation relating to the lease of the premises, a draft, cites the name of a corporation owned by JC’s sister-in-law. JC’s brother also has a criminal record, albeit much less extensive than JC’s.

4The Registrar relies on the provisions of s. 6 (2) (a), (d), (e) and (f) of the Liquor Licence Act R.S.O. 1990, chap. L.19 (the “Act”):

6. (1) A person may apply to the Registrar for a licence to sell liquor

Requirements

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

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

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

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

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

(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 interested 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.

5JC is not an officer or director of the Applicant. It is the Registrar’s position that he is a person having responsibility for the management or operation of the business of the Applicant. If the Tribunal were to find that he is such a person, then it follows that the Applicant made a false statement when it did not disclose his involvement when the licence was transferred to Pamela Llewellyn in 2009. Given JC’s long and extensive criminal record, the Registrar submits that, if he is a person defined in s. 6 (3) 4, then there are reasonable grounds for belief that the Applicant will not carry on business in accordance with the law and with integrity and honesty.

6In approaching the evidence in this appeal, the Tribunal must address the applicable standard of proof. In a recent decision, Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon's), 2013 ONCA 157, the Court of Appeal found that s. 6(2)(d) imports a lesser standard of proof than the civil balance of probabilities standard. At paragraphs [18] and [19] the Court stated:

[18] The standard of proof provided by s. 6(2)(d) of the Act is that of “reasonable grounds for belief”. There is no doubt that this is a lower standard of proof than “balance of probabilities”. The Supreme Court of Canada made that clear in Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40, [2005] 2 S.C.R. 100, which dealt with this standard, one commonly used in regulatory statutes, in the context of the Immigration Act. The court said this at para. 114:

The FCA has found, and we agree, that the “reasonable grounds to believe” standard requires something more than mere suspicion, but less than the standard applicable in civil matters of proof on the balance of probabilities: Sivakumar v. Canada (Minister of Employment and Immigration), 1993 CanLII 3012 (FCA), [1994] 1 F.C. 433 (C.A.), at p. 445; Chiau v. Canada (Minister of Citizenship and Immigration), 2000 CanLII 16793 (FCA), [2001] 2 F.C. 297 (C.A.), at para. 60. In essence, reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information: Sabour v. Canada (Minister of Citizenship & Immigration) (2000), 2000 CanLII 16300 (FC), 9 Imm. L.R. (3d) 61 (F.C.T.D.).

[19] As applied to this case, s. 6(2)(d) of the Act requires the Registrar simply to show that Mr. Barletta’s past or present conduct provides reasonable grounds for belief that he will not carry on business in accordance with the law and integrity and honour. The Registrar does not have to go so far as to show that Mr. Barletta’s past or present conduct make it more likely than not that he will not carry on business as required.

7The Supreme Court of Canada recently had occasion to review the standards of proof applicable in Canadian law in the case of F.H. v. McDougall, 2008 SCC 53, [2008] 3 SCR 41. Writing for the majority, Mr. Justice Rothstein stated at paragraph 40:

[40] Like the House of Lords, I think it is time to say, once and for all in Canada, that there is only one civil standard of proof at common law and that is proof on a balance of probabilities. Of course, context is all important and a judge should not be unmindful, where appropriate, of inherent probabilities or improbabilities or the seriousness of the allegations or consequences. However, these considerations do not change the standard of proof.

The Tribunal notes that the McDougall decision post-dates the Mugesera decision relied by the Court of Appeal in Famous Flesh Gordon’s. Since the Tribunal is bound by both of these decisions, can these two decisions be reconciled? The Tribunal is of the opinion that they can.

8A hearing before this Tribunal, and indeed before any judicial or quasi-judicial body, requires two steps. Firstly, the Tribunal hears evidence and makes findings of fact. It then applies those findings to the applicable legal standard to determine the success or failure of the party carrying the onus. The statutory provision in issue in the current case, “reasonable grounds for belief” is applicable to the second branch of the process. Having heard the evidence and made findings of fact based on the McDougall standard of balance of probabilities, the Tribunal then must review those facts to determine if they create reasonable grounds for belief that the Applicant will not carry on business in accordance with law and with integrity and honesty. As the Court of Appeal states, the test is: “do the facts create reasonable grounds for such belief,” not “is it more likely than not that the Applicant will not carry on business in accordance with law and with integrity and honesty.”

9Having characterized the standard in the manner set out above, it may be easier to understand it as a statutory test rather than a standard of proof. By doing so, the Tribunal does not have to embark on a dual analysis of the evidence. Of the four grounds relied on by the Registrar, only one imports the “reasonable grounds” standard. It is clear from McDougall that the standard of proof in the finding of facts, absent the statutory language, is on a balance of probabilities. By accepting the statutory language as setting a standard of proof rather than a test to be applied to the facts as found, the Tribunal would be forced to analyze the evidence first on a balance of probabilities to determine if three of the grounds advanced by the Registrar are applicable in this case, and then reanalyze the evidence on the lesser reasonable grounds standard to determine if the fourth ground is applicable. For instance, the Tribunal may determine on a balance of probabilities that the Applicant is financially responsible and thus not caught by s. 6(2)(a) and then have to re-examine that same evidence to determine if there are reasonable grounds for a finding that it may not carry on business in a financially responsible manner and run afoul of s. 6(2)(d).

10The Tribunal finds support for its position that the reasonable grounds standard is better characterized as an applicable statutory test rather than a standard of proof in the Supreme Court’s analysis in Mugesera. In defining reasonable grounds the Court stated: “In essence, reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information.” Thus, before making a finding regarding reasonable grounds, the Tribunal must first settle issues of credibility, weigh the evidence and find that it compels the conclusion that reasonable grounds for belief exist.

11The Registrar’s witnesses consisted of a number of police officers and an AGCO inspector. The Registrar also produced a forensic accountant, Kym Imrie, who examined the books and accounting practices of the Applicant. The Applicant produced four witnesses, two employees, Rhonda Ewing and Lindsay Fehir, the licensee, Pamela Llewellyn and JC. The Registrar’s witnesses either put LC at the premises allegedly acting in a manner consistent with responsibility for the management or operation of the Applicant or establish that on numerous occasions Pamela Llewellyn was not present when the Registrar would expect a manager to be present.

12The first witness for the Registrar was Detective Constable Mario Rizzo. In October 2009, Officer Rizzo was called to a disturbance at Jax Bar. Three males complained of being assaulted with a weapon in the early hours of October 25. He found one person bleeding from a gash on his head. The officer was directed towards Jax Bar. JC and another man exited the bar. Officer Rizzo stated that JC assumed a “fighting stance.” Officer Rizzo used pepper spray on JC and arrested him. He charged JC with three counts of assault with a weapon. JC was ultimately convicted of assault with a weapon.

13There were conditions on JC’s release pending trial following his arrest on the three assault charges. He was not to leave his residence unless accompanied by a surety and he was not to attend Jax. On May 27, 2010, Hamilton Police Service received a tip that JC was at the bar. Officer Rizzo arrived at the bar about 1:05 a.m. and found JC apparently acting as a bartender. He advised JC that he was in breach of his release conditions. JC acknowledged that he was aware of his breach. Officer Rizzo arrested JC and he was held in custody pending his trial. Ultimately JC was sentenced to time served for the assault and breach of conditions and probation.

14Both Pamela Llewellyn and JC testified concerning the assault and the breach of conditions. JC stated that he was taking garbage out of the premises in the early hours of October 25, 2009. Several people walking past the rear of the building decided to commit an act of vandalism and broke the fence. JC reacted aggressively to the situation and committed the assaults. Pamela Llewellyn and JC both stated that some of the victims of the assault came back shortly after the incident and apologized for the damage. They repaired the fence. On May 27, 2010 the night manager of the bar had called around midnight and said she had been taken ill and had to go home. At the time Ms Llewellyn was ill so the only person available to attend at the bar and close up was JC. Ms Llewllyn was aware of the release conditions but had no alternative but to ask JC to close up.

15Constable Michael Logue has been with the Hamilton Police Service for 11 years. He testified concerning dealings he had with Jax Bar & Grill in June and July 2011. On June 25, 2011 he was investigating an alleged assault on a female complainant. She said she had spent the evening in Jax before going home with someone she met there. The alleged assault occurred away from Jax and the bar was not implicated in any way. The complainant did not know the name of her alleged assailant so Constable Logue went to Jax on June 25 and again on June 26 to get copies of the video surveillance for the evening of June 24. On both occasions staff advised him that no manager was present and that he should speak to management about surveillance tapes.

16In an unrelated incident, on July 8, 2011 at 1:45 a.m. Constable Logue went to the vicinity of Jax Bar & Grill to deal with a disturbance. There was a report of fighting and screaming in a parking lot adjacent to the bar. When he arrived with a number of other officers he observed screaming but no fighting. There was upturned patio furniture on Jax patio and JC was sweeping up broken glass and directing patrons around it and off the property. Constable Logue assumed JC was Jax’s owner because he took a leadership role in dealing with the situation. Constable Logue had also had dealings with JC in the past that confirmed in him the belief that JC was the owner. He asked JC about the availability of surveillance tapes from the earlier incident. He stated that JC did not need to refer to anyone else. He informed Constable Logue that there were no video surveillance tapes available.

17In her evidence, Pamela Llewellyn testified that she had been present in the bar with JC on July 8, 2011 when the disturbance occurred. JC went out to clean up the patio and she saw him speak to Officer Logue. Officer Logue did not approach her. JC testified that he spoke to Officer Logue conversationally. He did not, nor has he ever, identified himself as the owner or manager of the bar. He was aware that there were problems with the video surveillance equipment so he was aware that there were no surveillance tapes. He stated that tapes are kept in the office and he does not have a key, a fact confirmed by Pamela Llewellyn. His knowledge of the state of the equipment is because he was assisting Ms Llewellyn in trying to find a repair for the problem.

18Brian Sharpe has been an AGCO inspector for over 6 years. He testified concerning an inspection he carried out at Jax Bar & Grill on August 19, 2011 in the company of Constable Christine Bourrie of the OPP. Constable Bourrie was conducting an investigation into the application to transfer the licence to the control of GC and wanted to speak to the owner. She was directed to a person sitting on the patio, JO, who was identified as the manager by the bartender, Lindsay Fehir. According to Mr. Sharpe, Constable Bourrie then asked to speak to the owner. Ms Fehir then dialled a number and gave the phone to Constable Bourrie. JC answered the phone and while Constable Bourrie was on the phone, Mr. Sharpe conducted an inspection of the establishment. He found no violations on that day. Nor has he found any violations on any other inspection and is not aware of any violations registered against the Applicant.

19Constable Leslie Lee is a 30 years veteran of the Hamilton Police Service. In her evidence she reviewed JC’s lengthy criminal record and the concerns of the Hamilton Police Service about any involvement of JC in the management or operation of Jax arising out of that record. She noted that JC had 12 criminal convictions while in his 20s, 11 in his 30s and a total of 27 convictions. The convictions run a gamut from drug trafficking, firearms offences, kidnapping to breaches of parole. She outlined the Hamilton Police Service concerns with the potential assumption of the operation of the Applicant by JC’s son. It seems from the evidence at the previous hearing that if GC had been granted a licence, JC would defer to GC in making decisions.

20Constable Lee conducted static surveillance of Jax Bar & Grill in November 2011. On four occasions she parked in a position to observe the interior of the premises. Times ranged from 10:00 a.m. to 9:00 p.m. She observed JC in the premises on each occasion. She observed him walking around the bar, talking to staff and going behind the bar, an area reserved for staff. She did not observe him eating or drinking in the bar. She did not observe Ms Llewellyn in the bar on any of these occasions. Constable Lee was aware that there was a kitchen on the premises that might be accessed through the bar but, on re-direct, she stated she had never observed JC acting as a cook.

21Kim Imrie is a forensic accountant employed by the AGCO. She is a Certified Management Accountant, a Certified Fraud Examiner and a Certified Anti-Money Laundering Investigator. She was asked to look at the Applicant’s accounts by Constable Bourrie. She prepared a report of her findings (Ex. 15). While it might be an understatement to say that she found the Applicant’s accounting sloppy with missing receipts and bank statements, she refined her findings under three main headings. She found that the accounts lacked transparency. This lack of transparency arose out of a failure to keep receipts and invoices. She found that large numbers of transactions were handled in cash. While in a bar business, cash transactions are not out of the ordinary, what concerned Ms Imrie was the use of cash for purchases such as food, liquor and beer. Cash transactions create a lack of control where it is impossible to determine to whom money is disbursed. Finally, Ms Imrie found that there was no apparent source for the funds deposited into the business by Ms Llewellyn. The current value of the shareholder deposits is $41,500.00 whereas the balance sheet showed only $25,000.00. Overall, Ms Imrie concluded that the Applicant’s books were sloppy. She would like to see more transparent bookkeeping. The numbers presented were unusual but she could not point to any specific impropriety. She felt the lack of appropriate documentation might cause issues with the Canada Revenue Agency.

22Constable Bourrie has worked at the OPP detachment seconded to the AGCO for 15 years. She conducts investigations as assigned by her supervisor arising out of requests by the AGCO licensing division. She investigated the application of GC for a transfer of the licence. Following that investigation she was asked to investigate the Applicant to determine the involvement of JC in the operation.

23As part of her investigation she reviewed the application for the transfer of the Applicant’s licence to Pamela Llewellyn (Ex 20). She noted that Pamela Llewellyn had represented that she would be investing $10,000.00 and would be operating the premises herself. In her Personal History Report (PHR) she stated that she would be the hands on daily manager. Constable Bourrie stated that anyone with a significant financial interest in the operation of a licensee or someone assuming a managerial role was required to complete a PHR. No PHR was received from JC.

24On August 17, 2011 Constable Bourrie was asked to do a Liquor Licence Investigation into the operation of Jax Bar & Grill. She ran criminal record checks and checked for small claims actions. She then attended the premises with Brian Sharpe on August 19, 2011 and asked the bartender, Lindsay Fehir, if she could speak to the owner. She corroborated Mr. Sharpe’s evidence by stating that Lindsay Fehir directed him to a man sitting on the patio, JO, who was identified as off-duty help. She told JO that she wanted to speak to the owner. His response was: “That would be John.” She clarified that JO was referring to JC and Lindsay Fehir then dialled the number. JC answered and Constable Bourrie asked him if he was the owner. She stated that JC paused for some time before answering: “That would be Pam.” Pamela Llewellyn then came on the line. Ms Llewellyn advised Constable Bourrie that she was running the bar while GC applied for his licence. Constable Bourrie advised Ms Llewellyn that she was investigating Jax and had a request for documents to give. Ms Llewellyn told her to leave it at the bar and to be picked up later.

25Through September, October and November of 2011, Constable Bourrie called Jax Bar & Grill on a number of occasions to discuss the disclosure of documents with Ms Llewellyn. A pattern developed over several phone calls where Constable Bourrie would ask for Ms Llewellyn and be told Ms Llewellyn was not there. Ms Llewellyn would call back several minutes later. On one occasion, a message left on an answering machine was not returned; on another Constable Bourrie did speak to Ms Llewellyn; and on a third occasion in November, JC answered the phone and identified himself a “Frank” but later admitted his true identity. Ms Llewellyn provided documents as requested but Constable Bourrie had some concerns about the sufficiency of the documents and made further requests. Finally, Constable Bourrie asked Ms Llewellyn to attend and interview at the OPP police station in Burlington.

26The interview was arranged for November 2, 2011. Ms Llewellyn attended with JC and counsel although JC was not in the room while the interview was being conducted. The interview covered Ms Llewellyn’s personal finances and the financial arrangements for the business. At that time GC was applying to take over operation of the business and Ms Llewellyn identified a number of business accounts as being jointly operated with George. Ms Llewellyn was vague about the extent of her personal assets and refused to estimate their worth. Constable Bourrie found it strange that she did not have an idea of her personal worth. Ms Llewellyn told Constable Bourrie that her initial $10,000.00 investment had come from JC’s brother and sister in law and that she had invested nothing in the business. Finally, Constable Bourrie reviewed a number of incidents that had occurred at the premises including the July 9, 2011 incident involving Constable Logue. She formed the impression that Ms Llewellyn was not as aware of the happenings at the bar as she might expect an owner/operator to be.

27Through the spring of 2012 Constable Bourrie followed up the Applicant to get further documentary disclosure with varying success. New accountants did engage in an exchange of emails but no documents were provided. By April 17 she advised the Applicant that if she had not received the requested documents by May 1 she would close her file. By this she meant that she would complete her final report with no more opportunity for the Applicant to give input.

28Constable Bourrie completed her examination in chief by summing up her concerns about the operation of the Applicant. She stated that Ms Llewellyn was receiving a long term disability pension. On almost every occasion when Constable Bourrie called or visited the premises, Ms Llewellyn was not there. During every discussion between Constable Bourrie and Ms Llewellyn, Constable Bourrie stated that Ms Lllewellyn was “suffering from some ailment.” Constable Bourrie remained concerned about the extent of the involvement of JC in the operation of the Applicant. Initially, Ms Llewellyn had told her that JC had no involvement. Ms Llewellyn that stated the business of the Applicant had been “set up” in her name. Finally, she admitted JC had some level of involvement.

29The first two witnesses for the Applicant were Ronda Ewing, a manager of the Applicant, and Leslie Fehir, a bartender of some years’ experience and, more recently, assistant manager. The difficulty the Tribunal has with the evidence of both of these individuals is that it was clear that they had allowed loyalty to Ms Llewellyn to trump veracity. They each produced a “will say” statement in affidavit form. The two affidavits had identical paragraphs written in the relatively stilted English commonly used by lawyers. When these similarities were pointed out to each witness they insisted that they had written the affidavits in their own words and did not copy them from each other nor were they given anything other than a “rough” precedent by counsel for the Applicant. They did admit to discussing the wording over the phone as they wrote their statements. In the case of Ms Fehir, on review of one paragraph wherein she deposes to the public spirited nature of JC’s family, she admitted on cross-examination that she had no such knowledge. The paragraph in Ms Ewing’s affidavit is identical to Ms Fehir’s on this subject but she was not questioned on it. Notwithstanding these concerns, their evidence did contain a core of truth and the Tribunal does not reject it all out of hand.

30Ms Ewing has been employed at the Applicant for 4 years. Her employment has been almost continuous except for a six month period when she worked at her previous employer to help them out. She has generally worked four shifts, usually Friday and Saturday night and two other nights during the week. Her duties include serving drinks, stocking the beer fridges, cooking as necessary and taking care of all the tables. Most of the customers are regulars and she described the bar as having a happy atmosphere similar to the bar on the television series “Cheers.”

31Ms Ewing insisted that she works for Ms Llewellyn. She was interviewed and hired by Ms Llewellyn in 2009. JC was not present at the time of her interview. She is aware of the relationship between Ms Llewellyn and JC and acknowledged that JC has a strong personality. Despite this, she stated that she did not take direction from JC nor defer to him in any operational decisions. Problems are brought to the attention of Ms Llewellyn and she takes direction and instruction from Ms Llewellyn.

32Ms Ewing stated that she has never seen JC manage the bar. In fact, she stated that she had never seen him employed at the bar. She described his role as that of a fixer. He would fix broken things. He knows who to call to get things fixed. In 2009 JC helped to get the business up and going. She has never referred to JC as the owner.

33According to Ms Ewing, Ms Llewellyn is at the business premises every day. She is generally there from approximately 11:00 a.m. to 1:00 p.m. to get things going for the day. Thereafter, Ms Llewellyn will be in and out buying food for the kitchen, arranging for beer and liquor delivery and attending to banking matters. On Monday mornings, Ms Llewellyn prepares pay cheques and takes documents to the accountant. As a general rule she attends each evening. On a slow night she will be there for three to six hours; on a busy night, like a Friday or Saturday, she will stay to closing. She will assist with stacking the beer fridge, carry cases of beer and cook. Occasionally, JC will cook if he is there and it is very busy.

34Counsel for the Registrar asked Ms Llewellyn about the application to transfer the licence to GC. She was unaware of it at the time. She was also unaware of the hearing before this Tribunal in 2012 with respect to GC’s application. She was definite in her statement that GC was incorrect in asserting that Ms Llewellyn was rarely at Jax. She is there daily. She was also unaware that Ms Llewellyn received a disability pension. She was aware that Ms Llewellyn had surgery several months ago and has high blood pressure but other than that was not aware of ongoing health problems.

35Lindsay Fehir was hired by Ms Llewellyn in May 2011. She has a BA in Psychology and has been a registrant under the Motor Vehicle Dealers Act. When the car sales market “tanked” in 2008 she went from car sales to working as a receptionist and parts delivery person before leaving the industry altogether. She was aware of Jax Bar & Grill because she had dated an employee. She had come to know Ms Llewellyn and, after taking the Smart Serve training online, she looked for a job. She was contacted by Ronda Ewing and began training in May 2011. Her early training was carried by Ms Llewellyn. If Ms Llewellyn was not available for any reason, she would be trained by Ms Ewing. She then started working on slower days progressing to busy day shifts and night shifts as her experience and comfort level increased. Several months ago she became assistant manager.

36In describing Ms Llewellyn’s activities, Ms Fehir echoed much of what Ms Ewing had said. Ms Llewellyn, according to Ms Fehir, works morning shifts. She makes or checks work schedules. She will also pick up and stock liquor and food supplies. She checks the keg numbers for beer and the figures relating to liquor sales. Ms Fehir described how the liquor bottles were weighed three times daily so that liquor sales could be calculated. Ms Llewellyn then reconciles the beer and liquor sales with the cash receipts to ensure no over or under selling.

37In the event an incident arises, Ms Fehir would first seek to contact Ms Llewellyn. She has both her cell phone number and her home number. She would call the cell number first and then the home number, if necessary. Should Ms Llewellyn not be available, she will contact Ms Ewing and in the absence of Ms Ewing she will use her own discretion to deal with the incident. She does not see JC often at the bar but may talk to him if repairs are needed. He knows who to call. In fact, she did not see him for the first two weeks or month that she worked there. JC does not have a major role at the bar. He may sweep up broken glass. He was there about a week before the hearing dealing with a broken dishwasher. She sees the rest of JC’s family from time to time at the bar, but not frequently.

38Both JC and Pamela Llewellyn testified. JC testified regarding his lengthy criminal record. He has been incarcerated for 14 of the last 30 years. When he arrived from his native Greece as a teenager, he was functionally illiterate. One benefit of his time in jail is the fact that he managed to educate himself to a grade eleven level. He is a cement finisher by trade. This is a well-paying job and he earns in the low six figures. It is a function of this work that when cement is being poured, there is no ability to leave the jobsite until the pour has been completed. He has worked up to 26 hours straight on at least one occasion and works long hours frequently.

39JC credits Ms Llewellyn with helping him turn his back on his criminal past. They began their relationship about six years ago and, except for the assault in response to the wilful damage being done to the property of Jax, he has not had any recent problems with the law. They are committed to each other with the result that he has not hesitated over the years to inject cash into Ms Llewellyn’s business as and when it has been needed. He considers these cash injections as loans. He has not formally documented the loans, but has no concerns that they will be repaid once Jax is making a profit. Other than making these loans, he has minimal involvement with Jax. He will drop in for a drink now and then. While he is there, he will assist in sweeping up broken class or cleaning the floor as necessary. He will also contact repair people if there is an equipment malfunction. Beyond that, he has no involvement.

40Ms Llewellyn described the history of the formation of the business. She has worked on the hospitality industry for approximately 15 years. She heard that the previous operator of Jax was having trouble and could not pay the rent to JC’s mother. JC suggested that she take over the business. She went to look at it and discussed it with JC’s mother. At that time, the plan was for her to operate the business until GC was in a position to take it over. That plan changed when GC was denied a licence and she will now continue as the operator.

41Since the premises were already in operation as a bar, no equipment purchases were necessary. The only outlay was to pay the previous operator for the value of his inventory. She agreed to a price of $10,000.00 and, since JC was at work at the time, he asked his brother to lend her the money until he could repay his brother. She started paying rent right away. When she could not afford to pay, she would borrow from JC.

42Initially Ms Llewellyn worked shifts herself. She would also go in each day and do the accounts, check inventory, check cleanliness, get supplies needed for the upcoming day or week and ensure staff was performing as necessary. The original staff continued in the early days but suddenly quit en masse. Ms Llewellyn worked double shifts until she hired Ronda Ewing. The two then covered shifts. A day shift lasts from 11:00 a.m. to 6:00 p.m and a night shift goes from 6:00 p.m. until closing. Finally Ms Llewellyn hired more staff and she and Ms Ewing were able to do fewer shifts. She now goes in daily to do paperwork. Once that is done she does shopping and banking and then goes back in the evening. If it is busy, such as on a Friday or Saturday evening, she will stay until closing. When she is not working Ronda Ewing and Lindsay Fehir can cover for her. They have her contact phone numbers in case they need to get in touch with her.

43Ms Llewellyn has never taken a salary out of the business. It was in a bad way when she took it over. Thereafter, with a lot of work she has built it up and now feels she is on the verge of becoming profitable. When the business is profitable she will repay JC for the business loans.

ANALYSIS

44As stated above, the Registrar relies on several provisions of s. 6 (2) of the Act. Of these, the Tribunal will address s. 6 (2)(a) first. The analysis will then proceed to a consideration of whether JC is a person who is responsible for the operation or management of the Applicant. From the latter analysis flows the answers to the remaining sections of the Act relied on by the Registrar.

45As pointed out by the Applicant’s counsel, there is a complete dearth of evidence indicating that the Applicant is not financially responsible. There is no evidence that the Applicant has not paid suppliers as its bills have become due or is in arrears on any payments. The sole area in dispute is the fact that JC has lent money to the Applicant to keep it solvent while the business turned the corner into profitability. The Tribunal does not find the lack of documentation concerning inter family loans to be troubling. To put it simply, it is not reasonable to assume that families will deal with each other with the same formality that banks and other lending institutions apply to their customers. In the case of the Applicant, while the financial statements are sloppy, no impropriety was identified by Ms Imrie, the quantum of the shareholder loans is known and recorded and there is an understanding on their repayment.

46The Registrar has based his case with respect to the other applicable subsections on a finding that Ms Llewellyn is a front for JC. To succeed, the Registrar carries the onus of establishing that JC is a person with responsibility for the management or operation of the Applicant. Great reliance is placed on several factors. Firstly, the Registrar cites the testimony of GC at his 2012 hearing before this Tribunal. Secondly, the Registrar points to inconsistencies in answers given by Pamela Llewellyn to Constable Bourrie coupled with an apparent lack of knowledge of major incidents at the bar. Thirdly, Registrar points to the evidence of Constables Rizzo and Lee that JC has been found apparently working in the bar on a number of occasions. Finally, the Registrar points to the money advanced by JC and argues that it indicates that he is the true beneficial owner.

47Whether the Tribunal must determine JC’s role on a balance of probabilities or that there are reasonable grounds for belief that he carries out such a function, the Tribunal is of the opinion that the Registrar has failed to satisfy the onus. The fact that Ms Llewellyn was not present at various times when Constable Bourrie tried to contact her does not establish on any basis that JC was responsible in her absence. Despite the Tribunal’s concerns over the evidence of Ronda Ewing and Lindsay Fehir, the Tribunal accepts that they do hold management positions and that a reporting structure exists to bring problems to the attention of the ultimate responsible person, Pamela Llewellyn. Ms Llewellyn does not have to be present on a continuous basis to take ultimate responsibility. When she is not present, she has made alternative arrangements to have responsible parties present. Ms Llewellyn signs cheques, checks inventory and orders supplies, hires, fires and schedules staff.

48The Registrar points to the fact that both JC and Pamela Llewellyn sat in the 2012 Tribunal hearing without testifying that GC’s statements were untrue. Essentially, the position of the Registrar is that counsel for the Applicant should have called the evidence of JC and Ms Llewellyn to refute the evidence of GC. The Tribunal reads nothing into the failure of these two persons to testify. Equally, the Tribunal does not put great stock in GC’s evidence about the involvement of Ms Llewellyn in the operation of the business. It is natural for GC to exaggerate his own involvement in the operation of Jax and minimize the contribution of Ms Llewellyn when trying to convince this Tribunal that he was a suitable licensee. It is also natural that someone with as little experience in the hospitality industry as GC should defer to his father and seek guidance, especially since his father had trained him in the construction industry. Ms Llewellyn has extensive experience in the hospitality industry and the Tribunal can think of no reason for her to defer to JC in such matters.

49The evidence concerning the activities of JC while at the bar is not consistent with him being a person with responsibility for the management or operation of the Applicant. They are consistent with the natural desire of one spouse to lend a helping hand to another. It would be unnatural for JC to sit idly by and step around mess or broken glass while his spouse or her staff tried to serve customers, cook food and tidy up. The evidence concerning the involvement of JC in the running of the business goes no further than this type of assistance and falls far short of JC assuming any operational responsibility or management role. When added to the fact that he has full time employment elsewhere, often working long hours, the Tribunal is forced to conclude he has no such role. The Tribunal accepts that the May 2011 incident of breach of release conditions was a one off occurrence and not the norm. Certainly, Hamilton Police Service did not indicate that he was a regular bartender when they had been called to the bar on other occasions.

50Having determined that JC is not a person who has responsibility for the management or operation of the Applicant, it remains to be determined if there are reasonable grounds for belief that the Applicant will not be operated in accordance with law or with integrity and honesty. The Applicant has been in business for four years. Inspector Brian Sharpe testified that it has had no regulatory infractions in all of that time despite it being in an area of town that was described by Constable Logue as somewhat less than desirable. Lindsay Fehir testified that police involvement has declined because of a zero tolerance policy. All indications are that the Applicant is well run and its operation has improved over time. The Tribunal finds that no reasonable grounds exist for belief that the Applicant will not be run in accordance with law or with integrity and honesty.

51The single area of concern to the Tribunal is the fact the JC has been observed accessing the bar area while the premises are open for business. He is not an employee of the Applicant and should not be behind the bar. The Tribunal accepts that he has done so to assist in cleaning up and repair of the dishwasher. Nonetheless, he should be excluded. The Tribunal is of the view that a condition should attach to the licence that JC be excluded from the area behind the service bar during the hours of operation of the Applicant.

51Based on the above findings, the Tribunal must conclude that the Applicant is not carrying on any activity that is in contravention of the law or regulations as set out in s. 6 (2)(f). The remaining ground advanced by the Registrar is that Ms Llewellyn made a false statement in her application. The single remaining possible false statement arises out of the source of the start-up funds. Ms Llewellyn disclosed on her application that she was investing $10,000.00 in the business. This sum was borrowed from JC although it was actually advanced by JC’s brother, CC. Only the Establishment Description Form (Ex. 20) asks for the amount of the investment. Ms Llewellyn stated $10,000.00. The form does not question the source of the funds nor does there appear to be a requirement that those funds not be borrowed. The Tribunal can find no false statement in the Application.

ORDER

52Based on the authority vested in it pursuant to s. 23(11) of the Act, the Tribunal orders the Registrar not to carry out his proposal to revoke the licence of the Applicant. The Tribunal orders that a condition be attached to the Applicant’s licence that JC not be permitted behind the service bar during hours of operation of the Applicant.