1859919 Ontario Inc. o/a Ye Olde Brunswick House v. Registrar of Alcohol and Gaming, 2015 CanLII 26067

Licence Appeal Tribunal

DATE: 2015-05-11

FILE: 8909/AGRPPA

CASE NAME: 8909 v. Registrar of Alcohol and Gaming

Appeal from an Order of Monetary Penalty of the Registrar of Alcohol and Gaming under the Alcohol and Gaming Regulation and Public Protection Act, 1996, S.O. 1996, c. 26

1859919 Ontario Inc. o/a Ye Olde Brunswick House Appellant

-and-

Registrar, Alcohol and Gaming Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR: Richard Macklin, Vice-Chair

APPEARANCES:

For the Appellants: J. Randall Barrs, Counsel

For the Respondent: Joyce Taylor, Counsel

Heard in Toronto: February 4 & 5, 2015

REASONS FOR DECISION AND ORDER

The Deputy Registrar of the Alcohol and Gaming Commission ("the Registrar") issued an Order of Monetary Penalty, on June 10, 2014 (the "Order"). The Order was in respect of a Liquor Licence held by 1859919 Ontario Inc., operating as Ye Olde Brunswick House (the "Brunswick House" or "Appellant"). The Order relates to allegations by the Registrar that the Brunswick House contravened the Liquor Licence Act, R.S.O. 1990 c. L. 19 (the "Act") and a regulation thereunder by allowing an underage patron to have alcohol and permitting drunkenness on the premises.

The Brunswick House, by Notice of Appeal dated June 19, 2014, appeals the Order.

Background

Section 45(1) of Ontario Regulation 719/90, made under the Act, prohibits licensees from permitting drunkenness on the premises. The leading case in interpreting s. 45(1) is 1213963 Ontario Ltd. (c.o.b. Sin City Bar and Eatery) v. Ontario (Alcohol and Gaming Commission), [2009] O.J. No. 1553 (C.A.) ("Sin City"). In Sin City, the Court held that the word "permit" in s. 45(1), informed what must be established by the Registrar to find a violation of that section (see Sin City, supra, at paras. 3-5). Permitting drunkenness entails more than the presence of a drunk person on the premises. There must be some basis, on the facts, by which the licensee knew or ought to have known of the drunkenness.

The word "permit" is also found in Section 30(4) of the Act, which provision prohibits a licensee from permitting an underage patron to have or consume alcohol in a licensed premises. The leading case on the interpretation of this section holds that a violation can be found, irrespective of any preventive "due diligence" efforts on the part of the licensee (see 977619 Ontario Inc. (c.o.b. as Heart & Crown Pub and Restaurant) v. Ontario (Registrar of Alcohol and Gaming), [2000] O.J. No. 5297 (Div.Ct.) ("Heart & Crown"). In other words, a finding under s. 30(4) can be made in circumstances where the Registrar has not established that the licensee "knew or ought to have known" of the service to the underage patron¹.

In the face of this apparent anomaly, the Tribunal – following the conclusion of the hearing- wrote to the parties and sought supplementary submissions on the following questions:

Question One: Section 30(4) of the Liquor Licence Act, R.S.O. 1990 c.L.19 and s. 45(1) of the of Ontario Regulation 719/90, under the Act, both have the word "permitted" as part of the statutory test for the offence. The Registrar has acknowledged that, in a hearing in respect of s. 45(1), he has to establish that the licence holder knew or ought to have known of the offence (see Sin City Bar and Eatery v. Ontario, [2009] O.J. No. 1553 (C.A.) at para. 3). In this light, is 977619 Ontario Inc. v. Ontario, [2000] O.J. No. 5297 (Div.Ct.) [Heart & Crown] (a case relied upon by the Registrar), where the Court held that the defence of due diligence was not available in a s. 30(4) case, still good law?

Question Two: If 977619 is no longer good law, in this regard, has the Registrar nonetheless, made out the offence on the facts?

The Tribunal received written submissions from the parties, the last of which was received on March 27, 2015. The following are the Tribunal's reasons, having considered those supplementary submissions.

The Evidence

AGCO staff, Inspector Devan Sookdeo and Inspector Brad Capes, attended at the Brunswick House on March 15, 2014, at around 12:06 a.m. The inspectors attended in response to an anonymous and unfounded complaint against the Brunswick House, regarding the qualifications and licences related to security staff.

In providing their versions of what happened next, each party called two witnesses. The Registrar's witnesses, Inspector Sookdeo and Inspector Capes, state that they entered the Brunswick House and initially conducted a quick walk through of the premises. They found no issues of concern. They then followed up on the investigation of the anonymous complaint. During that investigation, they found no issues of concern, although they noted the actions of a youthful looking woman (the "female patron") who was being argumentative, stood up, sat back down and knocked over a glass of beer. The inspectors then conducted a second walk through, starting at the front of the premises, again finding no issues of concern. They returned to the front of the establishment and noticed that the female patron, who was with two male patrons who were also youthful looking, had her head down on the table with a glass of beer in front of her.

The inspectors state that upon noticing the female patron with her head down, they walked over to her to investigate. A short time later, perhaps a few seconds, at most a few minutes, security staff and the Brunswick House Manager also attended to the female patron. The inspectors determined that they should speak to the female patron in a quieter place and asked her to attend the nearby kitchen area. Additional signs of intoxication became evident upon the female patron getting up to go to the kitchen. The inspectors were eventually able to obtain the female patron's identification. The identification provided to the inspectors indicated that the female patron was 18 years of age. The drinking age in Ontario is 19 years. Based on evidence obtained from the female patron's boyfriend (that she had consumed three beers at the Brunswick House and "something else"), and based on the visible signs of intoxication displayed by the female patron, the inspectors determined that in addition to having alcohol while underage, the female patron had also been permitted to become drunk.

Neither inspector observed the female patron consume alcohol.

In response, the Appellant called as witnesses its Manager and part owner, Braden Rubinoff, and security staff member, Matt Bauchamp. They testified to the rigorous identification testing practices conducted at the Brunswick House and to the immediacy of the establishment's attempt to remove the female patron from the bar, as soon as she showed signs of intoxication (the first sign being the head on the table next to a glass of beer). The tenor of the Brunswick House evidence was that they had done everything they could do to prevent the female patron from gaining entry into the establishment and getting intoxicated in the premises. They stated that the Brunswick House was the victim of a young woman who utilized fake identification and had "pre-drank" and "pre-drugged" (the suspected drug being MDMA), prior to attending the establishment. Although the licensee's witnesses did not see any false identification in the female patron's possession, they observed Inspector Capes appear very surprised – in a manner that meant to them that he observed something amiss - when he looked inside the female patron's purse. They further stated that immediately upon the intoxication being observed, the Brunswick House ceased serving alcohol to anyone in the female patron's party and arranged for a taxi ride home for her and her boyfriend.

Neither party summoned the female patron or anyone in her group.

The Law

The legislation that is pertinent to this dispute is section 30(4) of the Act, as amended and section 45(1) of Ontario Regulation 719/90, made under the Act: They state:

30. (4) No licensee or employee or agent of a licensee shall permit a person who appears to be under nineteen years of age to have or consume liquor in the licensee’s licensed premises.

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

A breach of the above-noted sections can lead to a progression of penalties under the legislation. At one end of the spectrum of discipline is what are termed as monetary penalties. The Registrar's jurisdiction to impose monetary penalties is set out in s. 14.1 of the Alcohol and Gaming Regulation and Public Protection Act, 1996, S.O. 1996, c. 26. An appeal of the imposition of a monetary penalty lies to the Tribunal (s. 14.1(5)). On appeal, the Tribunal's jurisdiction is limited to an "all or nothing" order. The Tribunal can confirm the penalty or set it aside (s. 14.1(7)).

The Registrar seeks a monetary penalty of $2,500 in respect of the presence of the underage patron and $1,500 in respect of the drunkenness of that patron.

A. Question One: Is Heart & Crown Still Good Law ("Question One")?

As set out above, following the conclusion of the hearing, the Tribunal sought written submissions from the parties on the following question:

[I]s [Heart & Crown] …(a case relied upon by the Registrar), where the Court held that the defence of due diligence was not available in a s. 30(4) case, still good law?

In the first instance decision in Heart & Crown Pub & Restaurant, [1999] O.A.G.C.D. No. 288, the Ontario Alcohol and Gaming Commission found a violation of s. 30(4) of the Act, and rejected the availability of a due diligence defence on the part of the licensee. Specifically, at para. 33 of its reasons, the Commission stated:

33 Mr. McCarthy's argument that the word "permitted" in section 30(4) of the Liquor Licence Act is akin to a requirement of MENS REA simply does not hold water. These proceedings are regulatory in nature and MENS REA is not a requirement for a finding of a violation; nor can the licensee avail itself of a defence of due diligence (Gordon Capital and The Westfort). This Board has in fact consistently defined "permitted", most recently in Sand Bar, as meaning to "afford the opportunity for, and fail to prevent" certain proscribed behaviour.

The Commission's ruling was appealed to the Divisional Court. In a brief Endorsement, affirming the Commission's findings, at [2000] O.J. No. 5297 (Div.Ct.), paragraph 1, Justice Southey stated:

1It is well settled that the defence of due diligence is not available. The evidence established that the minor consumed liquor in the licensed premises and that the liquor had been obtained from, that is, provided by, the licensee. In our view there were breaches of both subsection 41(1) of the Regulations and s. 30(4) of the Liquor Licence Act. [Emphasis added]

As noted above, the Divisional Court's ruling in Heart & Crown is the leading jurisprudence on s. 30(4) of the Act (the "underage prohibition"). That ruling does not avail a due diligence defence for the licensee, despite the wording of s. 30(4), which includes the word "permit".

As further noted above, the leading case on s. 45(1) of the Regulation – Sin City- based on the inclusion of the word "permit" in that section, states that permitting drunkenness entails more than the presence of a drunk patron at the bar. There must be some basis, on the facts, by which the licensee knew or ought to have known of the drunkenness. Specifically, as set out by the Court of Appeal in Sin City at paras. 3-4:

3 In our view, permitting drunkenness on the premises requires proof that the licensee knew or ought to have known of the drunkenness on the premises. That determination, of course, must be made in all the circumstances and, in particular, in the context of the various obligations and duties placed on the licensee by the relevant legislation and regulations: see The Queen v. Sault St. Marie, 1978 CanLII 11 (SCC), [1978] 2 S.C.R. 1299; The Queen v. Royal Canadian Legion, 1971 CanLII 372 (ON CA), [1971] 3 O.R. 552 at 559 (C.A.)

4 While there are cases from the Board that suggest that "permit" means simply failing to prevent and is established once drunkenness on the premises is shown to have occurred, there are also cases from the Board that are consistent with the interpretation that we hold is the correct one: e.g. see 1577107 Ontario Inc. (c.o.b. Place Bar & Grill) (Re), [2008] O.A.G.C.D. No. 405. See also Horseshoe Valley Resort Ltd. v. Alcohol and Gaming Commission, 2005 CanLII 81108 (ON SCDC), [2005] O.J. No. 5895 (Ont. Div. Ct.). [Emphasis added]

Indeed, in one of the cases cited with approval by the Court of Appeal in Sin City, the case of Horseshoe Valley Resort Ltd. v. Alcohol and Gaming Commission, 2005 CanLII 81108 (ON SCDC), [2005] O.J. No. 5895 (Div. Ct.), the Divisional Court stated as follows at paragraph 14:

14 With respect to the Board's second finding, we are persuaded that the Board's reasons fall far short of demonstrating that it interpreted and applied the words, "permitted drunkenness", as used in section 45(1) of the Regulation correctly... In order to properly find that the appellant permitted drunkenness with respect to Julie Strachan as alleged, the Board had to be persuaded that the appellant, through its employees, knew or should have known that Julie Strachan was drunk and that it failed, within a reasonable period of time, to take reasonable steps to effect her safe departure from the bar. [Emphasis added]

Based on the above and a principle known as the presumption of consistent expression, it can be argued that Question One should be answered in the affirmative and that the Court of Appeal's holding in Sin City has impliedly overruled the Divisional Court's holding in Heart & Crown. As a general rule, it is presumed that the legislature uses language carefully and consistently so that within a statute or other legislative instrument the same words have the same meaning and different words have different meanings (see Sullivan, Sullivan on the Construction of Statutes, (6th Ed.) (LexisNexis; Markham) (2014), at paras. 8.32-8.48). Applying this presumption of consistent expression to this case, the word "permit" would have the same meaning and effect under s. 45(1) of the Regulation, as it would under s. 30(4) of the Act. The Court of Appeal held, in Sin City, that – based on the word "permit" in s. 45(1)- a licensee could not be found liable under that section of the Regulation, unless the Registrar was able to prove that the licensee knew or ought to have known of the drunkenness on the premises. It would follow, it can be argued, that it was incorrect of the Divisional Court, in Heart & Crown, to not allow a similar defence to a licensee in a s. 30(4) case, when s. 30(4) is also qualified by the word "permit".

Question one, however, also squarely raises the doctrine of stare decisis. Although a parallel decision of an administrative tribunal does not bind a panel of the same tribunal, the judgments from higher courts are binding.

Thus, the Tribunal is bound to follow the decision of the Ontario Superior Court of Justice (Divisional Court) – in Heart & Crown – sitting, as it was, on an appeal from this Tribunal's predecessor tribunal – The Board of the Alcohol & Gaming Commission of Ontario. The principle that the defence of due diligence was not available in a s. 30(4) hearing was the principle on which Heart & Crown was decided in relation to the specific facts of the case.

Conclusion on Question One: Heart & Crown Is Still Good Law

Based on the foregoing, in the Tribunal's view, unless and until Heart & Crown is expressly overruled, it remains binding on the Tribunal – or is at a minimum highly persuasive - in s. 30(4) cases.

In the Tribunal's further view, in any event, the presumption of consistent expression does not, even when considered with the Court of Appeal's holding in Sin City, amount to an overrule of Heart & Crown. As noted by Sullivan, the presumption of consistent expression can be rebutted (see Sullivan, supra, paras. 8.43-8.49). Specifically, at paragraphs 8.45 and 8.46 of her text, Professor Sullivan notes:

8.45 One problem with the presumption of consistent expression is that it does not necessarily reflect the realities of legislative drafting. Much legislation is lengthy and complicated; there is not always time for careful editing… It is not surprising then, that inadvertent variations occur within a single Act. It is even more likely that they would occur within the statute book as a whole.

8.46 A second problem with the presumption, as pointed out by Cote, is that it conflicts, to some extent with the contextual principle in interpretation, which emphasizes that meaning is dependent on context. Identical words many not have identical meanings once they are placed in different contexts and used for different purposes. This is particularly true of general or abstract words. These factors tend to weaken the force of the presumption so that in many cases that courts assign it little weight. [Emphasis added]

In this case, the meaning of the word "permit" must be interpreted in context (see Sin City, supra, para. 3 and Sullivan, supra, para. 8.46). Drunkenness in most cases, is a matter of a progression in behaviour that can be identified over time in a licensed establishment. Patrons, in most cases, consume the very item – alcoholic beverages – that can lead to drunkenness. To not allow a test of "knew or ought to have known" or due diligence, would place a highly onerous burden on a licensee in the context of the sale of alcoholic beverages to patrons. Thus, the inclusion of the word "permit" in s. 45(1) of the Regulation should be recognized, as it was in Sin City, as a basis upon which to require proof by the Registrar that the licensee knew or ought to have known of the drunkenness on the premises.

In contrast, there are practical grounds that militate against the requirement that the Registrar prove, in a s. 30(4) case, that the licensee knew or ought to have known that the patron that was served alcohol was underage. The facts in this case serve as a good example. In this case, the licensee defended the allegations relating to the underage patron by pointing, after the fact, to the strict identification taking procedures that they maintain and asserted that the underage patron must have gained entry on the basis of false identification. The licensee did not call the security employee who "carded" the patron in this case. In a bar the size of the Brunswick House, it would be unlikely that a security employee would be able to remember carding the patron. The Registrar, moreover, cannot be expected to monitor the licensee's identification taking procedure or have his inspectors be present at the time the underage patron was allowed entry into the bar. Thus, the defence to the allegations – if they included a "knew or ought to have known" test- would boil down to an "honour system", with neither side being in a position to marshal convincing evidence in respect of the patron in question. If licensees simply had to assert that they maintained strict identification taking procedures, and are victims of false identification, in order to make out a defence to having an underage patron in the bar, the onus on the Registrar in s.30(4) hearings would too high. This is particularly so in light of the policy concerns that arise in the case of underage patrons in drinking establishments (for a discussion of those concerns, see Shoeless Joes Brant St. v. Registrar of Alcohol and Gaming, 2014 ONSC 7009 (Div.Ct.), at paragraph 16).

Thus, while there is a presumption that the word permit in s. 30(4) and s. 45(1) ought to have the same meaning and effect, the presumption can be, and in this case has been, rebutted.

Thus, the answer to Question One, in the Tribunal's view, is that Heart & Crown is still good law and the defence of due diligence is not available in a s. 30(4) case.² Based on that answer, Question Two need not be addressed.

The Tribunal, however, must still determine the result of the appeal on the underage issue – in light of the test set out in Heart & Crown- and the permit drunkenness issue – in light of the test set out in Sin City.

B. Findings re: The Underage Issue

The Registrar, relying on the ruling in Heart & Crown, argues that, under s. 30(4) of the Act, an offence has been made out as the female patron was under the age of 19 and either consumed or had alcohol at the premises. The Registrar relies on the following evidence:

i). The identification of the female patron as being 18 years of age on the night in question;

ii). That, at a point prior to being found with her head on a table, the female patron stood up and a beer from the establishment was so close to her that she knocked it over;

iii). That when the female patron was found with her head down on the table, there was a cup of beer next to her head; and

iv). The hearsay evidence from the female patron's boyfriend that the female patron had had three beers at the Brunswick House and "something else".

The Appellant points out that neither of the Registrar's witnesses observed the female patron consuming alcohol. Indeed, Mr. Rubinoff's evidence was that the female patron's signs of intoxication were consistent with drug use (MDMA), not alcohol consumption. The Appellant also argues that the hearsay evidence of the boyfriend should be given no weight, especially since the Registrar declined to call as witnesses, the female patron or any of the friends that were with her on the night on question.

The Appellant further submits that the offence has not been made out because it cannot be held liable for the presence of an 18 year old who must, based on the rigors of the Appellant's identification procedures, have utilized fake identification. The Appellant further argued that it was a victim of identification fraud as supported by the number of pieces of identification that the Appellant had in her wallet. This submission is weakened somewhat by the fact that there was no evidence regarding the specific identification in the female patron's wallet. The Appellant seeks that an inference be drawn that there was false identification in the wallet, based on Insp. Capes' expression when he viewed the wallet's contents.

The Tribunal concludes that the female patron had or consumed alcohol at the premises, on March 15, 2014, and, since she was underage at the time, the offence under s. 30(4) of the Act has been made out. In terms of the proof of the female patron consuming or having alcohol, the Tribunal is entitled to rely on the hearsay evidence of the boyfriend that the female patron had three beers and "something else". That evidence is consistent with the other evidence of her having had beer near her on two separate occasions, her overall conduct, the lack of signs of intoxication at the time she was first seen by the inspectors, contrasted with her condition being one of patent intoxication, as acknowledged by the Appellant, a short time later when her head was on the table. In other words, there was a rapid progression in the signs of intoxication during the time the female patron was in the bar. This is consistent with her having consumed or had alcohol while there. On a balance of probabilities, the Tribunal finds that the underage female patron had or consumed liquor in the Appellant's premises.

In terms of the Appellant's due diligence in identification taking procedures, as noted above, the Tribunal accepts as a matter of law that a due diligence defence of this nature is not available to the Appellant in the s. 30(4) context (see Heart & Crown, supra).

C. Findings re: Permitting Drunkenness

As discussed earlier, permitting drunkenness, under s. 45(1) of the Regulation, entails more than the presence of a drunk person at the bar. There must be some basis, on the facts, by which the licensee knew or ought to have known of the drunkenness (see Sin City, supra). If the Appellant observed drunkenness, but could not reasonably have acted sooner to remove the patron, the offence under the Regulation is not made out (see Horseshoe Valley, supra, at para. 14).

The Registrar submits that prior to its inspectors' second walk through of the premises, the female patron was in an argument with one of her friends, had stood up, fallen back down in her chair and knocked over a beer. That conduct, it is submitted, should be taken together with the severe signs of intoxication she exhibited a few minutes later, starting when her head was on the table. The Registrar then submits that this evidence forms a basis for the Tribunal to draw an inference of significant and prolonged intoxication, upon which the licensee should have acted sooner (see 1197801 Ontario Inc. (c.o.b. Body English), [2008] O.A.G.C.D. No. 252, at para. 72).

The Registrar further submits that drunkenness can include intoxication from a drug, such as MDMA, and thus the fact that the female patron may have been more high than drunk, does not afford a defence to the Appellant (see 516532 Ontario Ltd. (c.o.b. Jameson's Restaurant (Re), [2009] O.A.G.C.D. No. 64, at para. 116; and 1070879 Ontario Inc. (c.o.b. Zodiac Lounge) (Re), [2009] O.A.G.C.D. No. 176, at para. 101).

The Appellant's primary response, as discussed above, is that it acted with reasonable dispatch upon signs of intoxication being observed. The Tribunal notes that the Registrar's witnesses had ample opportunity to observe the female patron after their arrival at the premises. No issues of concern were observed. The time when drunkenness could be observed, however, on everyone's evidence, starts when the female patron had her head on the table. In this regard, the Tribunal accepts the evidence of Mr. Rubinoff and Mr. Bauchamp, that the licensee responded with reasonable dispatch and attended to the female patron, with water and, ultimately, a free cab ride home. The Appellant's response time to the signs of drunkenness was either seconds (if one accepts the evidence of the Appellant) or a few minutes (if one accepts the evidence of Insp. Capes). The Tribunal finds, on these facts, in either event, the Appellant could not reasonably have acted sooner than it did and thus, on the authority of Sin City and Horseshoe Valley, the offence of permitting drunkenness has not been made out.

Order

On the authority vested in the Tribunal, the Tribunal orders:

1. That the Registrar's Order of Monetary Penalty, dated June 10, 2014, of $2,500, in respect of a breach of s. 30(4) of the Act, is confirmed; and

2. That the Registrar's Order of Monetary Penalty, dated June 10, 2014, of $1,500, in respect of a breach of s. 45(1) of the Regulation, is set aside.

Footnotes

1. 1In terms of the interchangeability, in the regulatory context, of a "due diligence" test, with a negligence test (i.e. "knew or ought to have known"), see The Queen v. Saulte Ste. Marie, 1978 CanLII 11 (SCC), [1978] 2 S.C.R. 1299, at pp. 1313, 132-1321, 1324-1326.
2. 2The argument that a licensee is entitled to a due diligence defence in s. 30(4) cases, was recently referred to by the Divisional Court in Shoeless Joes Brant St, supra, at paragraph 8. The Court found it unnecessary to decide the issue because it found that, even if the defence was available, the appellant had not met the burden of demonstrating that it exercised due diligence in that case (see Shoeless Joes, supra). In at least one Tribunal decision, the ruling in Sin City was considered in a s. 30(4) case (see Arena Entertainment Inc. (Circa) (Re), 2009 CanLII 29726 (ON AGC), at para. 69). That decision, however, was based on the circumstances of that case and did not purport to establish a due diligence defence in s. 30(4) cases. Indeed, the Tribunal stated, at paragraph 69, that "[l]icensees must take great precaution against the ingenuity of those who wish to circumvent the age restrictions for the consumption of alcohol".