Licence Tribunal
Appeal d'appel en Tribunal matière de permis
DATE: 2015-04-01
FILE: 9291/GCA
CASE NAME: 9291 v. Registrar of Alcohol and Gaming
Appeal from a Notice of Proposed Order of the Registrar of Alcohol and Gaming under the Gaming Control Act, 1992, S.O. 1992, c. 24 to Revoke Registration
Ke Wang Zheng o/a Kevin’s Convenience Appellant
-and-
Registrar of Alcohol and Gaming Respondent
REASONS FOR DECISION AND ORDER
ADJUDICATOR: Mary Ann Spencer, Member
APPEARANCES:
For the Appellant: Darren Sederoff, Counsel
For the Respondent: Aviva Harari, Counsel
Heard in Toronto: March 18, 2015
DECISION AND ORDER
BACKGROUND
This is a hearing before the Licence Appeal Tribunal (the “Tribunal”) arising out of a Notice of Proposed Order to Revoke Registration issued by the Registrar of Alcohol and Gaming, under the Gaming Control Act, 1992 (the “Registrar” and the “Act” respectively). The Notice, dated December 11, 2014, proposes to revoke the registration of Ke Wang Zheng o/a Kevin’s Convenience on the basis that the Registrar has reasonable grounds to believe that Mr. Zheng will not act in accordance with law, or with integrity, honesty or in the public interest.
Mr. Zheng was registered as a gaming supplier on July 12, 2013. Kevin’s Convenience was inspected by Alcohol and Gaming Commission of Ontario (“AGCO”) inspectors on December 5, 2014. During this inspection, two video lottery terminals (“VLT’s”) with the characteristics of gaming machines, and 337 counterfeit DVDs were found. On December 10, 2014, a further inspection was conducted by AGCO inspectors and Toronto Police Services’ officers. During this inspection, 19 packs of unmarked cigarettes were found. The DVDs found at the previous inspection and the VLTs were still on site. Five charges, set out in detail in Section C of the Notice of Proposed Order (Exhibit 1), were laid against Mr. Zheng:
“Sell Infringing Copy” and “Offer for Sale Infringing Copies” contrary to provisions of the Copyright Act;
“Offer to Sell Improperly Packaged Tobacco” and “Offer to Sell Tobacco the Package does not contain Health Warning” contrary to provisions of the Smoke Free Ontario Act; and
“Keeper of a Place of Amusements No Licence” contrary to the City of Toronto Municipal Code
On December 12, 2014, AGCO inspectors, again accompanied by Toronto Police Services’ officers, attended at Kevin’s Convenience to deliver the Notice of Proposed Order and an Order of Immediate Suspension. Unmarked cigarettes were again found by police. On December 24, 2014, the Registrar issued a Notice of Further or Other Particulars (Exhibit 3).
At the outset of the hearing, Mr. Sederoff advised the Tribunal that the Appellant admits the factual allegations contained in the December 11, 2014 Notice. He further advised that all charges had been resolved, advising that the Appellant was only summoned with respect to the charges under the Smoke Free Ontario Act. Mr. Sederoff provided the Tribunal with a copy of the Information dated March 17, 2014 (Exhibit 4) which indicates that Mr. Zheng was fined $250 with respect to the charge of possession of unmarked cigarettes.
The focus of the Registrar’s evidence was on providing the Tribunal with further details with respect to the circumstances surrounding the allegations in the Notice of Proposed Order. The Appellant called no witnesses.
REGISTRAR’S EVIDENCE
The evidence of the Registrar was provided by four witnesses. Jade Leadbetter and Neline Fernando have been inspectors employed with the AGCO since June 2004 and January 2007 respectively. Officers Shawn Howard and Christopher Homan have been employed by Toronto Police Services for 24 and 5 years respectively.
Ms Leadbetter testified that she inspected Kevin’s Convenience on December 5, 2014 after receiving an anonymous tip that the establishment was selling illegal DVDs. When she arrived at the store, she asked Mr. Zheng where the DVDs were, to which he responded “no DVDs – that was a long time ago”. However, in a cabinet drawer, Ms. Leadbetter found a box containing 337 DVDs which, based on their packaging and markings, she believed to be illegal. When shown the DVDs, Mr. Zheng stated “I don’t sell”. Ms Leadbetter also found two VLTs at the back of the store, one of which had a sign (Exhibit 5) taped to it: “Don’t Touch – Someone plays in this machine”. That machine also bore a sign stating “No Gambling”. She did not test the machine to determine if money was being wagered or paid out.
Ms Leadbetter advised Mr. Zheng that having the DVD’s was an infraction. She testified that she believed that Mr. Zheng, whose first language is Mandarin, understood her.
On December 10, 2014, Ms Leadbetter returned to Kevin’s Convenience accompanied by AGCO Inspector Fernando and by four Toronto Police Services officers, including Officers Howard and Homan. After discovering that the DVDs were no longer in the cabinet, Ms Leadbetter asked Mr. Zheng what he had done with them and was told he had thrown them away. However, Ms Fernando testified that she found the box of DVD’s in a closet after moving a wheeled confectionary stand which blocked its door.
The VLTs were also still on the premises, but were unplugged. Signs reading “This machine will move out of store. Not available. No longer provide entertainment machine for customer” (Exhibit 6) were affixed to them.
Officer Howard testified that he has experience with video gaming machines. The characteristics of a machine determine its legality. The machines found at Kevin’s Convenience were 8 line video slot machines and had a bill feeder. He noted that only legal machines can have a payout button. The machines at the Appellant’s establishment had a “knock down” button which clears and resets the machine. He concluded that the machines were not legal, but noted that specific charges with respect to illegal gaming require the observation of the use of the machine and/or that the owner knows they are being used for this purpose. In this case, Officer Howard did not conduct any analysis of the machines and did not believe there was sufficient evidence to lay criminal charges. However, there is a City of Toronto bylaw requiring a licence for games of amusement used to generate income. Because Mr. Zheng does not have such a licence, a charge was laid.
Officer Howard also asked Mr. Zheng where he stored his “native cigarettes” and where the DVDs were. With respect to the cigarettes, Mr. Zheng told him he did not have any and did not sell them. With respect to the DVDs, Mr. Zheng said they belonged to a tenant’s friend, that he had only been storing them, and they had been taken away. He later said the DVDs had been thrown away. Asked by Mr. Sederoff if he had any evidence that the DVDs were being sold, Officer Howard replied he did not. He noted that the DVDs were sent to the Motion Picture Academy of Canada to establish if they were illegal, but that no report had yet been received.
Officer Homan testified that he also had a brief conversation with Mr. Zheng on December 10, 2014. He asked whether there were any illegal cigarettes or DVDs on the premises. Mr. Zheng stated no. Asked if Mr. Zheng understood him, Officer Homan said he did. After speaking to Mr. Zheng, Officer Homan conducted a search and found 19 cigarette packages with no taxation or health warning markings in the establishment’s stand-alone freezer.
Ms Leadbetter testified that Mr. Zheng appeared to be visibly upset when the items were found. The video gaming machines, the DVDs found by Inspector Fernando and the cigarettes found by Officer Homan were all seized by Toronto Police Services and charges were laid.
On December 12, 2014, Inspectors Leadbetter and Fernando attended Kevin’s Convenience to serve Mr. Zheng with the Notice of Proposed Order and an Order of Immediate Suspension. Officers Howard and Homan accompanied them to provide assistance. Ms Leadbetter advised Mr. Zheng that he could not sell any Ontario Lottery and Gaming Corporation (“OLG”) products. She told him to remove the OLG lottery tickets from the silent seller, the plastic display case on the counter.
While Ms Leadbetter was speaking to Mr. Zheng at the counter, a customer arrived and held up two fingers to which Mr. Zheng shook his head no. Constable Howard testified that he heard the customer say “I’ll take two” and that Mr. Zheng, who appeared nervous, said “not now”. Officer Howard told Mr. Zheng to go ahead and complete the sale, but the customer left the premises. Officer Homan followed the customer outside. He asked the customer, whom he testified also appeared nervous, what he had been trying to buy. The customer initially said “bread” but amended this to “cigarettes – the cheap kind” and indicated he had purchased them at the store before. Officer Homan did not keep any information with respect to the identity of the customer and, on cross-examination, acknowledged that the customer did not specify unmarked cigarettes and agreed that properly marked cigarettes are sold at different prices.
After returning inside, Officer Homan briefed Officer Howard about his conversation. Officer Howard then conducted another search for cigarettes. He testified he found 24 packages of unmarked cigarettes inside the photocopier behind the sales counter and advised Mr. Zheng that further charges would be laid.
Ms Leadbetter testified that after leaving Kevin’s Convenience on December 12, 2014, she realized that she had not taken Mr. Zheng’s registration certificate. Approximately 20 minutes after she had left the establishment, she returned. She discovered Mr. Zheng putting the OLG products she had told him must be removed, back into the silent seller.
THE LAW
The power to revoke a registration is set out in sections 10 and 12 of the Act:
- 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
SUBMISSIONS
Registrar’s Submissions
Ms Harari submitted that the totality of the past conduct of the Appellant provides reasonable grounds for the belief that he will not act with honesty, integrity or in accordance with law. Mr. Zheng has demonstrated a lack of respect for the law: unmarked cigarettes, pirated DVDs and gaming machines were all found at Kevin’s Convenience. Moreover, Mr. Zheng was untruthful with both the inspectors and the police with respect to whether or not DVDs were on the premises. It is the Registrar’s position that the Mr. Zheng’s gaming supplier registration should be revoked. Canvassed with respect to the Registrar’s position should the Tribunal decide not to revoke the registration, Ms Harari submitted that a suspension of a year’s time would be appropriate and that the registration should have conditions attached to it.
Appellant’s Submissions
Mr. Sederoff submitted that sanctions should be in proportion to the actions. In this case, the DVDs, cigarettes and gaming machines were all found within the space of one week. There is no clear evidence that either the DVDs or the unmarked cigarettes were being offered for sale and the charges have been resolved with Mr. Zheng being fined only with respect to the possession of the cigarettes found on December 10, 2014. After the December 5, 2014 inspection, the gaming machines were unplugged and a sign was affixed to them reading that they were not available and were being removed. There is no evidence that Mr. Zheng has done anything wrong with respect to his gaming registration. Noting that the registration had been suspended since December 12, 2014, Mr. Sederoff submitted that Mr. Zheng understands the seriousness of the situation and that a further suspension of 90 days with reasonable conditions attached to the registration would be sufficient sanction. He submitted two cases for the Tribunal’s consideration: Luo (K.R. Mini Mart) (Re), 2011 CanLII 19781(ON AGC) and to Esin (Collinson Convenience) (Re),2011 CanLII 10877 (ON AGC).
ANALYSIS
The issue to be decided in this matter is whether or not the past conduct of the Appellant provides reasonable grounds for the belief that he will not act as a supplier in accordance with law or with honesty, integrity or in the public interest.
Ms Leadbetter conducted her initial inspection on December 5, 2014 after receiving an anonymous tip that counterfeit DVDs were being sold at Kevin’s Convenience. Mr. Zheng initially said there were no DVDs and he did not sell them. However, a box containing 337 apparently counterfeit DVDs was found in a cabinet. On December 10, 2014, when Ms Leadbetter asked Mr. Zheng where the DVDs were, he told her they had been thrown out. When asked the same question by Officer Howard, Mr. Zheng initially said the DVDs had belonged to a tenant’s friend and he had been storing them, then amended this to say they had been thrown out. In fact, Ms Fernando found the box of DVDs in a closet.
In response to a question from Mr. Sederoff, Officer Howard testified that there was no specific evidence that the DVDs were being offered for sale, notwithstanding the fact that the police did lay charges under the Copyright Act on December 10, 2014. No alternate explanation was offered for the presence of the box of DVDs which Ms Leadbetter testified contained multiple copies of newly released movies. Although Officer Howard testified that he has not yet received a definitive report that the DVDs were counterfeit, both he and Ms Leadbetter testified that their packaging was consistent with pirated copies. The Tribunal notes that the DVDs were not openly displayed at the store. The fact that Ms Leadbetter received a tip that pirated DVDs were being sold at Kevin’s Convenience, the nature of the DVDs and their quantity leads the Tribunal to conclude that it is more likely than not that the DVDs were being sold.
On December 10, 2014, 19 packages of unmarked cigarettes were found in a freezer at Kevin’s Convenience. On December 12, 2014, Ms Leadbetter and Officer Howard both witnessed a customer attempt to buy two of something from Mr. Zheng who witnesses testified either shook his head no or said “not now” to the customer and then did not complete the transaction, although Officer Howard told him to go ahead and do so. Officer Homan testified that when he spoke to the customer outside, the customer, after first stating he was trying to buy bread, admitted he was trying to buy 'cheap’ cigarettes and had done so before. After conducting a search, 24 packages of unmarked cigarettes were found in cavities in the store’s photocopier. While the Tribunal acknowledges that cigarettes are sold at different prices, the fact that the customer did not immediately tell Officer Homan he was intending to buy cigarettes strongly suggests that he was not purchasing legally marked ones. This incident, and the fact that it stretches credulity that cigarettes for personal use would be stored inside a photocopier, convinces the Tribunal that it is also more than likely that the unmarked cigarettes were also being offered for sale.
The Tribunal finds it concerning that unmarked cigarettes were again found on December 12, 2014, two days after the seizure on December 10, 2014. Ms Harari suggested two possible explanations: the cigarettes had either been purchased to replace those seized or they simply had not been found at that inspection and had been forgotten. Both explanations are problematic. The Tribunal cannot conclude that Mr. Zheng would have completed a sale of cigarettes to the customer on December 12, 2014 had the inspectors and police officers not been present. However, the Tribunal must question why Mr. Zheng continued to have what can only be described as hidden cigarettes on site if not for sale. Mr. Sederoff suggested that the Tribunal could infer that the cigarettes were simply forgotten. Twenty four packages of cigarettes were found in the cavities of a photocopier directly behind the sales counter, arguably readily accessible for sales transactions. The Tribunal does not find it credible that a compliant registrant, having been charged on December 10, 2014 under the Smoke Free Ontario Act, would not remember they were there and ensure they were removed.
On December 5, 2014, two video gaming machines were in plain view. The photograph of the machines entered as Exhibit 5 shows a “No Gambling” sign and a handwritten sign reading “Don’t Touch – someone plays on this machine”. While the latter sign certainly suggests the machine was in use and Officer Holman testified that its characteristics were consistent with casino gambling machines, he also testified that there was insufficient evidence for criminal charges to be laid.
There was some suggestion that the fact that English is not Mr. Zheng’s first language may have presented some barrier and contributed to some miscommunication during the inspections. The Tribunal does note that Mr. Zheng was accompanied by a personal interpreter at the hearing. However, both Ms Leadbetter and Officer Homan testified that they believed Mr. Zheng clearly understood them when they spoke to him during the inspections on December 5 and 10, 2014. And, on December 10, 2014, while the video gaming machines were still on the premises, they were unplugged with a sign reading they were to be moved out of the store, an indication that Mr. Zheng did understand Ms Leadbetter on December 5, 2014.
Mr. Sederoff noted that there are no findings with respect to Mr. Zheng’s direct conduct as a gaming supplier. However, in assessing the past conduct of the Appellant and determining the appropriate sanction, the Tribunal must consider the totality of his conduct, not just that directly related to his registration as a supplier. The presence of video gaming machines, counterfeit DVDs and unmarked cigarettes provide reasonable grounds to believe that Mr. Zheng will not act as a supplier in accordance with law or with honesty, integrity or in the public interest.
In considering the appropriate sanction, the Tribunal has considered the cases submitted by Mr. Sederoff. In Luo (K.R. Mini Mart), the Appellant’s registration was suspended for a period of 21 days and conditions were placed on his registration. In this case, the Appellant had made cash payments to an undercover police officer based on credits accumulated on a video gaming machine in his store and had subsequently pled guilty to the resultant criminal charge. In Esin (Collison Convenience), 490 counterfeit DVDs were seized after being observed for sale in the store and the Appellant pled guilty to a criminal charge. The penalty was a 14 day suspension with conditions placed on the registration. Ms Harari noted, and the Tribunal agrees, that these cases can be distinguished from the matter currently before the Tribunal because each involved only one type of infraction.
In the case before the Tribunal, there is no evidence of infractions before or after the period December 5 to 12, 2014. And, with respect to the gaming machines, there is, as noted above, some evidence of compliance on December 12, 2014. However, there is also evidence that Mr. Zheng consistently was not truthful with the AGCO inspectors and the police officers. On December 5, 2014, before the box of DVDs was discovered in a cabinet, he told Ms Leadbetter he had none. On December 10, 2014, before Ms Fernando found the box of DVDs in a closet, he told both Ms Leadbetter and Officer Howard that he had thrown them out. On the same day, before unmarked cigarettes were found in the freezer, he told Officer Howard that he had no illegal cigarettes and did not sell them. Moreover, after those unmarked cigarettes were seized on December 10, 2014 and Mr. Zheng had been charged under the Smoke Free Ontario Act, more unmarked cigarettes were found on December 12, 2014. Further, after Mr. Zheng had removed lottery tickets from the silent seller as instructed by Ms Leadbetter in order to comply with the Order of Immediate Suspension on December 12, 2014, she found him re-inserting them when she returned to Kevin’s Convenience twenty minutes after leaving.
These actions demonstrate a pattern of dishonesty and lack of respect for the law. In particular, Mr. Zheng’s disregard for the Order of Immediate Suspension persuades the Tribunal that neither a further suspension nor conditions on the registration would result in compliance. The Tribunal therefore concludes that revocation of the Appellant’s registration is the appropriate sanction.
ORDER
Pursuant to the authority vested in the Tribunal under the Act, the Tribunal directs the Registrar to carry out the Proposed Order dated December 11, 2014 to revoke the registration of the Appellant.
LICENCE APPEAL TRIBUNAL
Mary Ann Spencer, Member
Released: April 1, 2015