751809 Ontario Inc. o\a Famous Flesh Gordon’s v. Registrar of Alcohol and Gaming, 2014 CanLII 60751

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2014-10-06

FILE:

8668/LLA

CASE NAME:

8668 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

751809 Ontario Inc. o\a Famous Flesh Gordon’s

Appellant

-and-

Registrar of Alcohol and Gaming

Respondent

ORDER

ADJUDICATORS:

D. Gregory Flude, Vice-Chair

Gary Yee, Associate Chair

APPEARANCES:

For the Appellant:

Richard Posner, Counsel

For the Respondent:

Scott Hutchison and Samuel Walker, Counsel

Heard in Toronto:

September 3, 2014

REASONS FOR DECISION AND ORDER

1The Registrar issued a Notice of Proposal in August 2009 under the provisions of the Liquor Licence Act, R.S.O. 1990, c. L. 19 (the “Act”) seeking to revoke the registration of the Appellant on the ground that there were reasonable grounds for belief the Appellant will not carry on business in accordance with the law and with integrity and honesty. The basis for the Registrar’s belief is the fact that the sole officer and director of the Appellant, Robert Barletta, is a member of a criminal organization, the Hell’s Angels Motor Cycle Club. The Registrar served an Amended Notice of Proposal on or about February 23, 2010, and it is the Amended Notice of Proposal that was the basis of the appeal.

2This matter has had a long and complicated procedural history. At the time the proposal was issued, appeals were heard by the Board of the Alcohol and Gaming Commission of Ontario (AGCO). The Board held hearings over four days on January 11 through 13 and April 21, 2011. They decided in the Appellant’s favour. The Registrar appealed the Board’s decision to the Divisional Court, and when he was unsuccessful there, he appealed to the Court of Appeal. The Court of Appeal granted the Registrar’s appeal and ordered the matter to be sent back for a re-hearing. In the interim, this Tribunal became the appeal body for liquor licensing matters and the Board became a governance board for the AGCO. The Court of Appeal specifically ordered that this Tribunal was to conduct the re-hearing. Both parties agreed that the matter was properly before this Tribunal.

3No new evidence was presented before this Tribunal. Rather, the Parties relied on the record that was before the Board in 2011. They also agreed that the earlier evidence supported certain factual findings by this Tribunal and they submitted an Amended Agreed Statement of Facts, which is set out below (individuals names have been replaced with initials).

1. An Agreed Statement of Facts was filed at the original proceeding in this matter in early 2011 (Exhibit Book, Vol. 1, Tab I). The present Agreed Statement of Facts serves as an updated version of the 2011 Agreed Statement of Facts and is intended to replace it for the purposes of the instant proceeding before the Licence Appeal Tribunal.

2. The Applicant accepts that the evidence presented to the Licence Appeal Tribunal or available to the Registrar demonstrates, and agrees that the Tribunal should find, the following facts:

A. Hells Angels Motorcycle Club

3. The Hells Angels Motorcycle Club (”HAMC") is a group that has as one of its main purposes or main activities the facilitation or commission of serious offences that result in the direct or indirect receipt of a financial or other material benefit by the group or members of the group. As such it is a criminal organization as defined in s. 467.1 of the Criminal Code, R.S.C.1985, c. C-46 (as amended).

4. The London Chapter of HAMC ("London HAMC") adheres to the world, national, and provincial written and unwritten rules of the HAMC.

5. The essential characteristics and the written and unwritten rules of the HAMC are as described in the expert opinion and evidence of Det. Sgt. Leonard Isnor (Exhibit Book, Vol. 1, Tab 1; Compendium, Tabs 7 & 8).

B. London HAMC

6. 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.

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

8. The Members of the London HAMC, other than Mr. Barletta, and their outstanding criminal charges are as follows:

LONDON HELLS ANGELS MEMBERSHIP

OUTSTANDING CHARGES / SENTENCES

(AS OF JULY 21, 2014)

a. WM — Currently on bail charged with participation in a criminal organization, keeping a common betting house, engaging in bookmaking, and conspiracy to commit an indictable offence.

b. SB — No outstanding criminal charges.

c. SS — No outstanding criminal charges.

d. DM — No outstanding criminal charges.

e. RH — No outstanding criminal charges

f. SB — No outstanding criminal charges.

g. DH — No outstanding criminal charges.

h. JS — Currently charged with possession of a Schedule ll substance.

i. VB — No outstanding charges.

j. SS — No outstanding criminal charges.

j.

k. FS — Currently charged with possession of a firearm (x 3), unauthorized possession of a firearm (x 2), possession of a weapon obtained by crime, occupy motor vehicle with firearm inside, possession of a prohibited weapon (x 2), possession of property obtained by crime, possession for the purpose of trafficking (x 3), production of a controlled substance, possession of a controlled substance (x 2), careless use of a firearm (x 3), breach of a recognizance (x 3), and fail to comply with an undertaking (x 2).

l. JB (hangaround) — No outstanding criminal charges.

m. JF (hangaround) — Currently charged with possession of a weapon for a dangerous purpose.

n. JB (hangaround) — No outstanding criminal charges.

9. The London HAMC has twelve (12) full-patch members. Nine (9) of the twelve (12) members have criminal records. Two (2) of the three (3) hangarounds also have criminal records. These records are as follows:

LONDON HELLS ANGELS MEMBERSHIP

CRIMINAL RECORDS

(AS OF JULY 21, 2014)

a. Robert Barletta — No criminal record.

b. WM — Fourteen (14) criminal convictions since 1980, as follows:

b.assault, mischief, fail to comply with a recognizance, mischief, criminal negligence in operation of a motor vehicle, unlawfully at large, theft, theft, assault, possession of a narcotic, possession of a prohibited weapon, uttering threats, possession of a prohibited/restricted firearm with ammunition, and unlawfully keep machine for gambling.

c. SB — Four (4) criminal convictions since 1997, as follows: assault, resist arrest, assault, and assault.

d. SS — No criminal record.

e. DM — Twelve (12) criminal convictions since 1993, as follows:

e.assault, possession of a weapon, fail to comply with a recognizance, assault causing bodily harm, fail to comply with a recognizance, assault, trafficking in a narcotic, trafficking in a restricted drug, fail to comply with a probation order, possession of property obtained by crime, possession of a firearm knowing its possession is unauthorized, and obstructing a peace officer.

f. RH — Thirty-seven (37) criminal convictions since 1985 as follows:

f.robbery, break and enter, possession of stolen property, careless use of a firearm, mischief, mischief, assault cause bodily harm, assaulting a peace officer, causing a disturbance, possession of a narcotic (x 2), fail to comply with a recognizance (x 2), mischief (X 4), assault (x 3), fail to appear in court, fail to comply with recognizance, assault, assault, fail to comply with a probation order, assault a peace officer, careless storage of a firearm/ammunition contrary to a prohibition order (x 2), possession of a prohibited weapon knowing its possession is unauthorized (x 2), possession of a prohibited/restricted firearm with ammunition, and possession of a controlled substance, causing a disturbance, causing a disturbance, assault, uttering threats, and attempt to commit an offence.

g. SB — Four (4) criminal convictions since 1995, as follows: impaired driving, possession of a narcotic for the purpose of trafficking, conspiracy to traffic in a controlled substance, possession of a controlled substance for the purpose of trafficking.

h. DH — Four (4) criminal convictions since 1978, as follows:

h.break and enter, assault, impaired driving, and assault.

i. JS — Five (5) criminal convictions as follows: break and enter with intent, fail to comply with a recognizance, possession of a schedule ll substance, break and enter with intent, and- assault.

j. VB — No criminal record.

k. SS — One (1) criminal conviction for impaired driving in 1995.

l. FS — Seven (7) criminal convictions since 2009 as follows: obstruct peace officer, possession of a schedule I substance for the purpose of trafficking (x 5), and fail to comply with a recognizance.

m. JB — No criminal record.

n. JF — Sixteen (16) criminal convictions since 1996 as follows: fraud, mischief, trafficking in a schedule I substance, possession of a scheduled substance for the purpose of trafficking, fail to comply with undertaking, unauthorized possession of a prohibited or restricted weapon, assault, uttering threats, fail to comply with a probation order, fail to attend court, fail to comply with a recognizance, assault, fail to comply with a probation order (x 2), assaulting a peace officer, and obstructing a peace officer.

o. JB — One (1) criminal conviction for impaired driving since 1995.

o.

C. Gatekeepers MC

10. In 2011, the H-Crew Motorcycle Club of London regularly attended Hells Angels functions and associated with Hell’s Angels members. The group was controlled by London Hell’s Angels member David "Hammer" MacDonald and the name of the group was derived from MacDonald's nickname of "Hammer".

11. In 2013, much of the H-Crew membership "patched over" to the Gate Keepers Motorcycle Club at the behest of David MacDonald. The Gate Keepers MC of London has now become the official support club of the London HAMC.

12. The Gate Keepers membership in London is not fully known by the authorities, but four (4) individuals have been confirmed as members.

13. None of these individuals are facing outstanding charges.

14. The criminal records of the known Gate Keepers members are as follows:

GATE KEEPERS MEMBERSHIP

CRIMINAL RECORDS

(AS OF JULY 21, 2014)

a. SS — Seven (7) criminal convictions since 1982, as follows: break and enter, theft, mislead a peace officer, wilful damage to public property, possession of a narcotic, possession of a narcotic, assault, and possession of a schedule ll substance.

b. SV — No criminal record.

c. PL — No criminal record.

d. DB — Eighteen (18) criminal convictions since 1981 as follows: break and enter and theft (x 5), fail to comply with an undertaking, theft, theft, break/enter and theft, possession of stolen property, break and enter, uttering threats, assault causing bodily harm, mischief, assault with a weapon, assault, assault.

d.

E. 14 Swinyard Street - The London HAMC Clubhouse

15. Prior to July, 2008, the London HAMC maintained a Clubhouse at 14 Swinyard Street in London.

16. Robert Barletta is the owner of 14 Swinyard Street. He has been the owner since 2003.

17. The London HAMC Clubhouse was fortified in a fashion consistent with the modifications described at pages 34 and following of the Expert Statement of Opinion of Det. Sgt. lsnor (Exhibit Book, Vol. 1, Tab 1). The Clubhouse is accurately described and depicted in the Affidavit of Det. Const. Rafiq Bhabha (Exhibit Book, Vol. 2, Tab 2 ff.). Det. Const. Bhabha’s affidavit was sworn on June 24, 2008. He has since updated his affidavit and sworn a new version as of September 6, 2012. The content of the 2012 affidavit is identical except for some additions which the Registrar is not seeking to put before the Tribunal.

18. In July, 2008, the Superior Court of Ontario made an order ‘freezing’ the property in anticipation of a hearing to have the property forfeited pursuant to the Civil Remedies Act, 2001, S.O. 2001, c. 28. The Court found that there were reasonable grounds to believe that the London HAMC Clubhouse was an instrument of unlawful activity and/or that it was the proceeds of unlawful activity within the meaning of the Civil Remedies Act. These proceedings remain outstanding.

E. The Licencee

19. Robert Barletta is the sole officer, director and shareholder of 751809 Ontario lnc., the holder of the licence, and owner of the establishment operating as Famous Flesh Gordon's. He first applied for the licence in April 2001 and the licence was granted on July 5, 2001.

4Section 6 of the Act sets out the criteria for licensing. More particularly, it sets out the grounds upon which a licence may be denied or revoked. The Registrar relies on s. 6 (2)(d). Given that the wording is permissive with exceptions, the section makes it clear that the onus is on the Registrar to establish that reasonable grounds exist to deny the Appellant a licence. The applicable provisions read:

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

(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;

(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.

5It is agreed that the provisions of s. 6(2)(d) apply to Robert Barletta. Given the agreed facts in this case, the matter comes down to this: do the circumstances of Mr. Barletta’s involvement in the HAMC provide reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty? The Registrar asserts that it does and the Appellant points to an approximately 13 year unblemished record in running the business together with the fact that Mr. Barletta has never been charged, let alone convicted of a criminal offence. The Registrar relies heavily on the evidence of Det. Sgt. Leonard Isnor, who is a member of the Ontario Provincial Police and the coordinator of the Biker Enforcement Unit, a unit in the OPP responsible for investigating outlaw motorcycle gangs. The Appellant asserts that while Det. Sgt. Leonard Isnor is knowledgeable about outlaw motorcycle gangs in general, his conclusions that the Appellant will not carry on business in accordance with the law and with integrity and honesty are speculative and have no application to this particular matter.

6Det. Sgt. Leonard Isnor’s description of the HAMC is set out in a written opinion that he then tracks closely in his oral evidence before the Board. Membership in the club is strictly controlled to prevent infiltration by police and law enforcement agencies. Candidates must first be introduced by a member who has known them for a minimum of five years. The sponsor introduces the prospective member to the local chapter and the prospective member may be accepted as an official friend. Once accepted as an official friend, the prospect has his photo taken and that, together with his full name and date of birth are circulated across to all members across Canada. Members across Canada can then advise if they have any knowledge of the prospective member. This process is designed to weed out former police officers, corrections officers and others who are considered undesirable. There then follows two other stages, hangaround and prospect.

7At the next step, the hangaround stage, the prospective member wears a breast patch identifying the chapter. There follows a step called the prospect stage, in which the prospect circulates throughout the region to become known to all members. He may work the bar at the clubhouse or carry out other functions. A prospect will also participate in the criminal activities of the chapter. Advancement from a hangaround member to a prospect and then from prospect to full patch member requires unanimous acceptance of all members of a chapter following a vote. In essence, to become a member of this criminal organization a prospective member must spend an extended period of time convincing the other members that he is trustworthy and reliable.

8In reviewing the obligations of a full member of the HAMC, Det. Sgt. Leonard Isnor identified unwritten criteria for membership. The first is that a member must be 100% devoted to the HAMC. It becomes his first family. He must always be available and must have the interests of the organization at heart completely. The second is that a member must have a good criminal network. There are also requirements that a member must be ready to help another member, must not make statements to police and must not give out information to destroy the club.

9Det. Sgt. Leonard Isnor used the word “paramilitary” to describe the structure of the HAMC. It is the chapter level and the role of president that is the most relevant to the Tribunal since Mr. Barletta is a member of the London chapter and was its president for at least five years. Each chapter has a number of officers. At the top of the hierarchy is the president. The president runs the chapter and has a veto over all chapter activities. The evidence suggests that it is not the chapter itself that carries out criminal activity, but rather, that individual members carry out criminal activities under the name or sponsorship of the chapter, and use their membership to enhance their activities. A chapter controls a territory and, according to DS Isnor, the president is responsible for ensuring that members carrying out criminal activity on the chapter’s “turf” pay a percentage of their takings to the chapter. To do so, the president must be aware of all of these activities.

10It flows as a necessary conclusion from the agreed findings of fact that Mr. Barletta, as a full patch member of the HAMC, meets all of the criteria for membership set out in Det. Sgt. Leonard Isnor’s evidence. He is 100% dedicated to the club; he has a good criminal network and he will put the interests of the club above all others. For a period of at least five years, as chapter president, he was aware of all HAMC criminal activity in the London area and ensured that the local chapter was paid its levy. In the list of members and their criminal convictions agreed to by the parties, a significant number of the members have been involved in drug trafficking offences, activities that Mr. Barletta had to have been aware of and had to have ensured that the chapter got its “cut.” This awareness by Mr. Barletta is a finding of fact that the Tribunal can easily make on the basis of the Agreed Statement of Facts and the undisputed evidence of Det. Sgt. Leonard Isnor regarding the “essential characteristics and the written and unwritten rules of the HAMC” (see para. 4 of the Agreed Statement of Facts).

11Against this criminal involvement, the Appellant argues that, in 13 years of operation, it has never had a disciplinary incident. It also points to the fact that Mr. Barletta has never been charged with a crime. It points to the fact that the wording of s. 6(2)(d) directs the Tribunal’s focus to the manner in which the Appellant, under Mr. Barletta’s direction and ownership, will carry on business. The business record and a lack of charges, according to the Appellant, trump Mr. Barletta’s criminal associations. He may be a member of a criminal organization and an associate of known criminals outside of this business environment, but not within it.

12The differing positions of the parties may be characterized as one of focus. The Registrar argues that looking at the whole of Mr. Barletta’s past and present conduct, there are reasonable grounds to exclude him from operating licensed premises. The Appellant argues that the focus should be on his business activities at the licensed premises, which have been unblemished by any disciplinary record. The Court of Appeal specifically addressed this issue, as follows:

25The Registrar’s application to revoke Mr. Barletta’s liquor licence required the Board to apply the test in s. 6(2)(d) of the Act. It is helpful to reiterate its provisions:

6(2) Subject to subsection (4) or (4.1), an applicant is entitled to be issued a licence to sell liquor except if, [...]

(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.

26This test entails an examination of the past and present conduct of the person seeking to acquire or maintain the privilege of carrying on an activity authorized by the state, namely a licensed establishment. The purpose of the examination is to see if there are reasonable grounds for belief that the person will, in future, carry on the activity in a way that is not contrary to the public interest. Many regulatory statutes use this approach.

27The question is whether the Board misconstrued this test in this case. The Divisional Court found that it did not. With respect, I disagree, for three reasons.

28First, in examining Mr. Barletta’s past and present conduct, the Board focussed on his conduct as a licensee. The Board’s penultimate paragraph dealing with his past and present conduct makes this clear:

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. [Emphasis in the original.]

29The difficulty is that there is no such limiting language in the subsection. The Registrar is entitled to rely on any past or present conduct, whether in the operating of the licensed establishment or not, that affords reasonable grounds for belief that the individual will not carry on business as required by s. 6(2)(d). The words of the subsection, “past or present conduct”, are not limited to the operation of the business or in any other way. Their ordinary and grammatical meaning, in the context of legislation that is designed to ensure that licensed establishments will be operated by those who can be counted on to properly serve the public interest, requires that past and present conduct not be confined to the individual’s operation of the licensed establishment.

30Second, the Board appeared to require evidence of past criminal activity by Mr. Barletta in order to find past conduct supporting revocation. The Board put it this way at paragraph 100:

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.

31Once again, there is no such limitation in the test. Both the plain language and the purpose of the legislation make that clear. Past conduct that is not criminal could also provide the necessary reasonable grounds for belief.

32Third, in exploring the way in which Mr. Barletta has carried on and will carry on the business of his establishment, the Board focused on whether or not he is ungovernable, that is, whether he has observed and will observe the regulatory laws governing a licensed establishment. Paragraphs 138 and 139 quoted above make this clear. With respect to both the past and the future, there is no such limitation in the legislation. The Board can look beyond Mr. Barletta’s past or present observation of the regulatory laws for his establishment. Moreover the requirement that he carry on business in future in accordance with the law and with integrity and honesty is not limited to complying with the regulatory laws applicable to licensed establishments. It is too narrow to look merely at his future compliance with regulatory laws. Compliance with the law generally and acting with integrity and honesty are not so limited.

13It follows from the above reasoning that the Tribunal is charged with looking at the whole of Barletta’s past conduct and weighing the various factors to determine if, as a whole, they provide reasonable grounds for belief that he will not carry on business in accordance with law and with integrity and honesty. The flaw in the Appellant’s proposed test is that it essentially requires the Registrar to catch licensees in an act of wrongdoing. The fact is that as a first filter, s. 6(2)(d) asks the Registrar, and on appeal, this Tribunal, to consider a licensee’s background, as a whole, to determine if there are reasonable grounds for belief that this Appellant will not carry on business in an appropriate manner. The Tribunal must consider any past or present conduct, and this would include conduct that may fall short of criminal behaviour. Furthermore, the Tribunal must also not limit itself to conduct related to operation of the licensed establishment.

14The Tribunal must apply the statutory standard of “reasonable grounds for belief,” which is more than mere suspicion. As noted, the Tribunal finds, on the basis of the undisputed evidence of Det. Sgt. Leonard Isnor, that Mr. Barletta, by virtue of his extensive involvement and leadership role in the HAMC, is 100% dedicated to the club, is required to have a good criminal network and puts the interests of the club above all others. This is a criminal organization that has deeply held values and beliefs that include an obvious lack of respect for obeying the law. This strongly supports the conclusion that there are reasonable grounds for belief that the Appellant will not carry on business in accordance with law and with integrity and honesty. The fact that there have not been any liquor licence infractions for 13 years may be one relevant consideration, but this lack of record does not outweigh the effect of Mr. Barletta’s continued involvement in, and leadership of, this criminal organization.

15The Appellant raised the possibility of conditions that may be attached to the license, such as prohibiting gang colours. The Tribunal does not believe that any conditions will overcome the concerns that are raised when the owner and operator of these premises is a leader of a criminal organization such as the HAMC. As noted by the Registrar, the concern is not over the customers of this establishment; it is about the licensee.

ORDER

16Pursuant to the authority vested in it by s. 23(11) of the Act, the Tribunal orders the Registrar to carry out his proposal to revoke the licence of the Appellant as set out in the Amended Notice of Proposal to Revoke a Licence #17903 dated February 23, 2010.