Liang Ouyang o/a USave Milk v. Registrar of Alcohol and Gaming, 2015 CanLII 9116

Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2015-02-18

FILE:

8852/GCA

CASE NAME:

8852 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

Liang Ouyang o/a USave Milk

Appellant

-and-

Registrar of Alcohol and Gaming

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

D. Gregory Flude, Vice-Chair

APPEARANCES:

For the Appellant:

Darren Sederoff, Counsel

For the Respondent:

Phillip Morris, Counsel

Heard in Toronto:

October 7 & 8, November 13, 2014 and January 21, 2015

REASONS FOR DECISION AND ORDER

1The Appellant, Liang Ouyang, operates a convenience store under the name of USave Milk. He is registered as a supplier of gaming products under the Gaming Control Act, 1992, S.O. 1992, Chapter 24 (the “Act”). In March of 2014, he found himself the subject of a police investigation. A search of the store and his living quarters above the store discovered in excess of 600 cartons of cigarettes for which taxes had not been paid under the Tobacco Tax Act R.S.O. 1990, chap. T.10 (the “TTA”). He admits possession of untaxed cigarettes for resale.

2The search warrant was triggered by a police undercover operation to determine if the Appellant was dealing in stolen goods. Charges were laid under both the Criminal Code and the TTA but all charges have subsequently been dropped. The Registrar, relying on the factual allegations that formed the basis of the charges, has issued a Notice of Proposed Order to revoke the Appellant’s registration pursuant to s. 10 and s. 12 of the Act. The Appellant appeals the Notice of Proposed Order to this Tribunal pursuant to s. 13(5).

3The Tribunal heard from the officers involved in the undercover operation. Much of that evidence related to the execution of the search warrant and the cataloging of the items found, particularly the tobacco products. As stated above, the Appellant admits to possessing large quantities of untaxed cigarettes for resale, so the Tribunal does not need to review that evidence in any great detail. Other items found during the search include goods sold by the undercover police officers as allegedly stolen goods and goods with proprietary labeling. The Appellant’s store is on Vaughan Road in Toronto. It is within walking distance of a Shopper’s Drug Mart and a Loblaws store. The goods with the proprietary labels are from Shopper’s Drug and Loblaws. With respect to the proprietary goods, the Registrar invites the Tribunal to find that they are actually stolen goods purchased by the Appellant from either street people or drug addicts.

4Detective Constable Marlin Bond is a 27 year veteran of the Toronto Police Service. During that time he has been involved in many aspects of policing, including undercover operations. In the course of his duties, he had dealings with a recently arrested individual who, at the time of arrest, was in possession of a box of goods and was on his way to the Appellant’s store to sell them. He advised Detective Bond that the Appellant purchased stolen goods from addicts at a deflated price. He identified the products the Appellant was seeking to buy as Vitamin D drops, Ensure and baby formula. The informant stated that he used money obtained in this manner to buy drugs. He also stated that he was aware that several other people sold stolen goods to the Appellant. Sometime later, when Detective Bond moved to the Major Crimes unit he decided to investigate further.

5The operational plan developed to determine if the Appellant was dealing in stolen goods involved the use of undercover police officers. On cross-examination, Detective Bond was asked about the availability of other investigative techniques. He stated that while the police have a number of investigative techniques, he did not consider that any other techniques would work in this situation. The officers would pose as indigent persons and addicts. They were to approach the Appellant and offer to sell him apparently stolen goods. The two frontline officers in question were Constable Stea and Constable Marchis and the operation was scheduled to take place over several days starting on March 28, 2014.

6Constable Stea has 16 years of service with the Toronto Police Force. He has been involved in undercover work with the Drug Squad in the past and is in a pool of officers available to conduct undercover operations. For the investigation into the Appellant’s activities, he took on the persona of a crack cocaine user. He dressed in a disheveled manner and was dirty and smelly. He entered the store by the rear entrance just after noon on March 28 and approached the Appellant who was sitting behind the counter. He asked: “Do you want anything from Shoppers.” The Appellant waved his hand in a negative manner and said: “Not now.” The surveillance video (Ex 17) shows Officer Stea retreating out of view towards the back of the store and coming back approximately a minute later and speaking to the Appellant again. A further short conversation ensued and again the Appellant waved his hand in a negative manner. Officer Stea left the store.

7Detective Bond decided that Officer Stea should make one more attempt so approximately one hour later, Officer Stea returned to the store and, asked if the Appellant needed anything. After a short conversation when the Appellant waved his hand, Officer Stea left. On his way back to the police rendezvous point, Officer Stea struck up a conversation with a man who appeared to be indigent. This man was subsequently identified as B. Officer Stea told B that he was trying to offload some stuff to the “Chinese guy” [the Appellant]. B told Officer Stea that he had recently sold stuff to the Appellant and the Appellant had short changed him. He said: “He will take it if you wrap it nice.”

8The next day, March 29, a second officer, Officer Marchis, entered the store to offer to sell goods to the Appellant. Whether by serendipity or by design was not disclosed in the evidence, but she entered the store at the same time as B, the person who told Officer Stea previously that he had sold stolen goods to the Appellant. It seems that B lent Officer Marchis a measure of credibility because her reception was markedly different from Officer Stea’s on the previous day. Gone was the suspicion with which the Appellant treated Officer Stea. The Appellant’s spouse was behind the counter. She dealt with B and sold him a lottery ticket. She made a phone call. While they waited for the Appellant, B., Officer Marchis and the Appellant’s spouse had a very friendly discussion. Officer Marchis showed the Appellant’s spouse a couple of packets of razors she had hidden inside her jacket. When the Appellant arrived less than a minute later, she again showed the razors but the Appellant told her he could not sell them. There followed a discussion of what the Appellant could sell. He told her he could sell Vitamin D drops and baby formula. Officer Marchis then left the store.

9Approximately half an hour later Officer Marchis returned to the store with Officer Stea. She had a number of items hidden in her jacket. She and Officer Stea dealt with the Appellant and he purchased product from them. He then spent some time with them pointing to product on his shelves that he told them he could sell. Using the information that he had provided, the two officers left the store and returned the next day with more products.

10The surveillance tapes show that, after Officer Stea first entered the store with Officer Marchis, the Appellant dealt with Officer Stea without inhibition or reservation. Officer Marchis had gained credibility by entering the store with B, a person who had previously sold goods to the Appellant. Her credibility with the Appellant then transferred to Officer Stea by association. The Appellant freely pointed out on his shelves what products he would purchase from them. When the two officers attended on March 30, his spouse went so far as to bring her laptop computer out and show them what products the Appellant would buy. When the Appellant arrived a few seconds later, he printed up a list of products and marked it with the prices he would pay.

11When the police executed a search warrant following the dealings of the two officers with the Appellant, and a third officer who purchased untaxed cigarettes, they found several items that were proprietary to either Shopper’s Drug Mart (Life brand) or Loblaws. The Registrar invites the Tribunal to find that these goods were stolen and purchased from B or people like him.

12The Act sets out the grounds upon which the Registrar may seek to revoke a gaming supplier’s licence:

Registration of suppliers

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 …,

Proposal to suspend or revoke a registration

12. 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.

Registrar’s proposed order

13. (1) If the Registrar refuses to grant or renew a registration or proposes to suspend or revoke a registration, the Registrar shall serve notice of a proposed order, together with written reasons, on the applicant or registrant.

Right to hearing

(2) The notice of the proposed order shall inform the applicant or registrant that the person is entitled to a hearing before the Tribunal.

Request for hearing

(3) To request a hearing, the person shall serve a written request on the Registrar and the Tribunal within fifteen days after the Registrar serves the notice of the proposed order.

Scheduling the hearing

(5) If the person requests a hearing, the Tribunal shall schedule and hold the hearing.

Order of Tribunal

(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.

Discretion of Tribunal

(9) In making an order, the Tribunal may substitute its opinion for that of the Registrar.

Terms of order

(10) The Tribunal may attach such terms to its order or to the registration as it considers appropriate.

13The Registrar submits that the evidence discloses that the past conduct of the Appellant gives reasonable grounds to believe that the he will not carry on business in accordance with law and with integrity and honesty. He submits that the Appellant purchased what he believed were stolen goods from Officers Stea and Marchis at a small fraction of their retail price. He then looked to resell the goods at greatly increased prices but still less than the sale price at the nearby Shopper’s and Loblaws. According to the Registrar, there is evidence of possession of stolen goods, given the presence of the proprietary brands for sale. The Appellant also had his living quarters above the store crammed with untaxed cigarettes.

14The Appellant argues that there is no evidence that the Appellant knew the goods he was buying from indigent people were stolen. He initially rebuffed Officer Stea’s advances and only police persistence caused him to deal with the officers. While it is a criminal law doctrine, the Appellant pleads the actions of the police were analogous to entrapment. With respect to the untaxed cigarettes, the Appellant points to the evidence of Jeff Longhurst who is the Director of Licensing and Registration at the Alcohol and Gaming Commission of Ontario, the office of the Registrar under the Act. Mr. Longhurst stated that in previous cases, possession of untaxed cigarettes had not been considered grounds for revocation. In re-direct he stated that it would depend on the circumstances of each case. He could not recall an instance dealing with this number of untaxed cigarettes.

15Reviewing the evidence as a whole, and particularly the surveillance videos of the dealings with Officers Stea and Marchis, it is clear that there was no police persistence to induce the Appellant to step out of character and take actions he would not otherwise have taken. The only dealings that remotely support such an allegation are those of Officer Stea on the first day of the undercover operation. Officer Stea had three extremely short conversations with the Appellant on two visits to the store. He asked if the Appellant wanted anything from Shopper’s, was rebuffed and left. The sum total of all three interactions is measured in seconds, not minutes or hours.

16The same argument cannot be made with respect to the dealings with Officer Marchis. She was not rebuffed at any time, having gained credibility by her serendipitous association with B. The Appellant’s spouse and then the Appellant immediately dealt with her and negotiated with her about some apparently stolen razors. Thereafter, in several further attendances with Officer Stea, the Appellant began to purchase goods at greatly reduced prices. What is perhaps more telling is the fact that both the Appellant and his spouse begin to educate the officers on what goods he would buy from them and the prices he would pay. It strains credulity to believe the Appellant was not deliberately urging the officers to go the local store and steal specific goods on his behalf.

18With respect to the proprietary goods found on the Appellant’s shelves, the Tribunal is of the opinion that the only reasonable conclusion is that they had been purchased from B or persons like B in the knowledge that they had been stolen. Their pricing, below the retail price at the other stores, completely eradicates any suggestion that they had been legally purchased from those stores for resale.

17The Tribunal also finds that the possession of in excess of 600 cartons of untaxed cigarettes and the failure to pay approximately $15,000.00 in taxes on these products is, in itself, sufficient grounds to seriously impugn the honesty and integrity of the Appellant. The Appellant’s dealings with these cigarettes are on an industrial scale. Almost all of the spare room in his living quarters above the store was crammed with cases of cigarettes. His possession of them indicates a propensity to try and grab and quick profit regardless of the legalities of any specific transaction.

ORDER

18The Tribunal finds that the past conduct of the Appellant shows a lack of integrity and honesty and multiple breaches of the law in the conduct of his business. It provides reasonable grounds to believe that he will not carry on the business of being a supplier in accordance with law and with integrity and honesty. Accordingly, pursuant to the provisions of s. 13(8)(a) of the Act, the Tribunal confirms the Notice of Proposal to Revoke of the Registrar and orders the Registrar to revoke the Appellant’s licence as a supplier under the Act.