2246226 Ontario Inc. o/a GT Hasty Market v. Registrar of Alcohol and Gaming, 2013 CanLII 78244

Licence Appeal Tribunal

Appeal d'appel en Tribunal matière de permis

DATE: 2013-11-07

FILE: 8283/GCA

CASE NAME: 8283 v. Registrar of Alcohol and Gaming

Appeal from the Notice of Proposed Order under the Gaming Control Act, 1992, S.O. 1992, Chapter 24 to Revoke Registration

2246226 Ontario Inc. o/a GT Hasty Market Applicant

-and-

Registrar of Alcohol and Gaming Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR: D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Applicant: Gurmail Singh, Agent

For the Respondent: Aviva Harari, Counsel

Heard in Toronto: October 24, 2013

REASONS FOR DECISION

1Pursuant to s. 13 (3) of the Gaming Control Act, 1992, S.O. 1992, c. 24 (the “Act”), the Applicant, 2246226 Ontario Inc. o/a GT Hasty Market (the “Applicant”) appeals from the Notice of Proposed Order dated August 1, 2013 issued by the Registrar of Alcohol and Gaming to revoke its registration as a Seller (Lottery Retailer) under the Act.. The basis for the Registrar’s proposed order is that there are reasonable grounds for belief that the Applicant will not carry on business in accordance with law or with integrity and honesty.

2The Applicant admits all of the factual allegations in section C of the Notice of Proposed Order. The focus of the Registrar’s evidence was on providing the Tribunal with further details of the allegations. The Tribunal heard from four witnesses for the Registrar and from two witnesses on behalf of the Applicant, Gurmail Singh and his spouse. The Applicant’s spouse testified solely to the fact that it was her belief that the Applicant did not know that Toronto Transit Commission (“TTC”) tokens found in his possession were counterfeit.

3Gurmail Singh is the sole owner, director and shareholder of the Applicant. Following some years driving a dump truck, he decided to open a business. He set up the Applicant in 2010 and applied to become a lottery ticket retailer. It was his practice to sell TTC tokens from the store. He would purchase the tokens from the nearest TTC subway stop, usually in amounts of 50 or 100 at a time. He would then sell them to people either singly or several at a time. He had a handmade sign in the window stating that TTC tokens were for sale. At no time was the business ever an authorized TTC agent.

4One day in and around late September 2012, a young woman knocked on the store window. Mr. Singh went out to speak to her on the street. She had 500 TTC tokens for sale at a price slightly lower that the TTC price. The tokens were in TTC wrappers. He decided to purchase the tokens and conducted the whole transaction in the street. When explaining why the transaction took place in the street, Mr. Singh explained that the store was equipped with video surveillance and he felt the young woman did not want to be seen on camera. He went so far as to suggest that she may have been in the store earlier and noted the video surveillance. The young woman had no identification and no receipt was given for the purchase price.

5Shortly after the purchase of the tokens, the Applicant sold five tokens to a customer. This customer had a token holder. The tokens kept falling out of the holder so she formed the belief that the tokens were counterfeit. On October 10, 2013 she contacted the TTC and spoke to an investigator, Zac Nettleton. Mr. Nettleton testified that he examined the four tokens the customer had left in her possession and concluded they were counterfeit. He consulted with another investigator, Chris Pedies. Together the investigators went to the Applicant’s premises and Mr. Pedies purchased five tokens from Mr. Singh. Mr. Pedies testified that he conducted a visual examination of the five purchased tokens and then had the tokens tested in a machine that analyzed the metal content. The five tokens were confirmed to be counterfeits. The going TTC rate for five tokens is $13.25. Mr. Pedies was charged $14.25. The complainant stated she was charged $17.00.

6On October 16, 2013, Mr. Nettleton attended at the store with Mr. Pedies and purchased five more tokens for $14.25 from Mr. Singh. These tokens were also confirmed to be fakes. On October 17, Toronto Police executed a search warrant. Both Mr. Pedies and Mr. Nettleton were present. Mr. Nettleton testified that, after 62 tokens had been found in an around the cash register, Mr. Singh was asked if there were any more tokens in the store. He stated that there were no more. A further search disclosed that there were four hundred more counterfeit tokens in the store in plastic bags containing 100 each.

7Mr. Singh was charged with a number of counts relating to dealing with counterfeit tokens. Those charges were dealt with on May 9, 2013. The Crown withdrew the charges and Mr. Singh entered into a peace bond and gave an undertaking to do 75 hours of community service.

8Mr. Pedies testified concerning the impact of the sale of counterfeit tokens. He noted that, in addition to the obvious cost to the TTC, there was also a potential cost to unsuspecting purchasers. A purchaser believing himself or herself to be in possession of genuine tokens may confront charges if the token is found to be counterfeit. If the purchaser cannot provide a satisfactory explanation of where the tokens were purchased there are potential charges of counterfeiting. The loss to the TTC amounts to 2500 tokens per day or around $2,400,000 per annum.

9The Applicant was convicted of two counts of selling cigarettes to minors: once in 2012 and once in 2013. In an application to sell lottery products at a second business location, Mr. Singh did not disclose the charges and convictions. It is illegal to sell cigarettes to a person under 19. Similarly, it is illegal to sell lottery products to a person under 18. Frank Cuda, Manager of Eligibility in the office of the Registrar, testified that in the view of the Registrar, the similarity in checking purchasers’ identification to confirm their age means that the charges for serving minors indicate the Applicant is unlikely to carry on business in accordance with the law. Overall, Mr. Cuda was of the view that there were reasonable grounds for belief that the Applicant would not carry on business in accordance with law and with integrity and honesty.

THE LAW

10The registration requirement to sell Ontario Lottery and Gaming Corporation products is set out is set out in s. 4 (1.1) of the Act:

(1.1) Except as provided in this Act and the regulations, no person shall provide goods or services for a lottery scheme conducted and managed by the Ontario Lottery and Gaming Corporation or for any other business operated by, or on behalf of, or under contract with the Ontario Lottery and Gaming Corporation in conjunction with such a lottery scheme, unless,

(a) the person is registered as a supplier; and

(b) the person is providing those goods or services to the Ontario Lottery and Gaming Corporation or a registered supplier.

11The Registrar’s power to refuse and application or revoke a registration applicable in this matter are set out in ss. 10 and 12:

10. The Registrar shall refuse to register an applicant as a supplier or to renew the registration of an applicant as a supplier if,

(b) there are reasonable grounds to believe that the applicant will not act as a supplier in accordance with law, or with integrity, honesty, or in the public interest, having regard to the past conduct of,

(i) the applicant or persons interested in the applicant,

(ii) the officers, directors or partners of the applicant, or persons interested in those officers, directors or partners, in the case of an applicant that is a corporation or partnership,

12.(1) The Registrar may propose to suspend or to revoke a registration for any reason that would disentitle the registrant to registration or renewal of registration under section 10 or 11 if the registrant were an applicant.

12Finally, the powers of the Tribunal following a hearing are set out in s. 12. (8):

(8) After holding a hearing, the Tribunal may by order,

(a) confirm or set aside the proposed order;

(b) direct the Registrar to take such action as the Tribunal considers the Registrar ought to take to give effect to the purposes of this Act.

ANALYSIS

13The focal point for any analysis of the behaviour of Mr. Singh and, by extension, the Applicant, is the manner in which he came into possession of the counterfeit tokens. The focus is not on Mr. Singh’s knowledge that the tokens were fake, as he would like to insist. The transaction was explained in detail, it appears for the first time, when Mr. Singh answered questions put to him by Counsel for the Registrar. He explained how a young woman had knocked on his window. She would not enter the store: “Because there was surveillance equipment.” The Applicant undertook a cash business transaction valued at approximately $1,300.00, according to his evidence, in the street. No receipt was given, no identification was shown and surveillance cameras were avoided.

14The evidence compels the Tribunal to conclude this exchange was an illicit transaction and both participants in it were aware that it was an illicit transaction. While Mr. Singh may have believed that the tokens in his possession were genuine, he could not help but be aware of the fact that they had been obtained in an illegal manner. At a minimum, Mr. Singh knew he was buying illicit tokens notwithstanding that it may have come as a surprise to him to find out that the tokens were counterfeit. His failure to disclose the existence of 400 other tokens during the execution of the search warrant strongly suggests he was also aware the tokens were counterfeit. Had he genuinely believed they were not counterfeit, he had nothing to lose by disclosing their existence.

15The Tribunal takes note that Mr. Singh was convicted of two counts of selling cigarettes to underage consumers within a year. One purpose of penal sanctions is to educate a wrongdoer so future behaviour may be modified. It appears Mr. Singh did not learn. He does not even recall the first conviction and the second he justified on the basis that the purchaser was tall.

16When the cigarette sales are considered together with the behaviour surrounding the purchase of the tokens, it appears that Mr. Singh has not exercised good judgment in ensuring his business operates on the right side of the law. The Tribunal has little confidence in his statements that he has now learned his lesson and, if given a suspension rather than having his registration revoked, he will exercise the requisite judgment in the future. The Tribunal finds there are reasonable grounds to believe that the Applicant will not carry on business in accordance with law or with integrity and honesty. Dishonest dealing by registrants is clearly not in the public interest, especially in a cash intensive business where opportunities for dishonest conduct are plentiful.

DECISION

17Pursuant to the authority vested in the Tribunal under the Act, the Tribunal confirms the Registrar’s proposal dated August 1, 2013 to revoke the registration of the Applicant.