Licence Tribunal
Appeal d'appel en Tribunal matière de permis
FILE: 10042/LLA
CASE NAME: 10042 v. Registrar of Alcohol and Gaming
Appeal from the Notice of Proposal of the Registrar of Alcohol and Gaming to Refuse an Application for a Licence
1943370 Ontario Inc. operating or intending to operate as Capital Barbershop Appellant
-and-
Registrar of Alcohol and Gaming Respondent
DECISION AND ORDER
ADJUDICATOR: Geneviève Blais, Member
APPEARANCES:
For the Appellant: Ainslie Dunstone, Paralegal
For the Respondent: Joyce Taylor, Counsel
Heard in Ottawa: May 24 & 25, 2016
DECISION AND ORDER
BACKGROUND
The Registrar of Alcohol and Gaming (the “Registrar”) under the Liquor Licence Act, (the “Act”) issued a Notice of Proposal, dated February 4, 2016, which proposed to refuse an application for licence of 1943370 Ontario Inc., operating or intending to operate as Capital Barbershop (the "Appellant"). The Appellant appealed this Notice of Proposal to the Licence Appeal Tribunal.
The reasons given by the Registrar to refuse the liquor licence are that one of the two shareholders of the Appellant corporation has a criminal record and that the shareholder made a false statement in the application. The particulars are set out in paragraph 6 of the Notice of Proposal as follows:
Between 1990 and 2010, Hoang Bao Diep was convicted of numerous offences under the Criminal Code and Controlled Drugs and Substances Act including crimes of violence, failing to attend court and abide by court orders and repeated alcohol related driving offences. Mr. Diep failed to disclose his 2002 and 2003 criminal convictions in the Personal History report filed with the Commission.
The Appellant is a small corporation with two principal shareholders of the company. The two principals operate a barbershop. They have applied to the Alcohol and Gaming Commission of Ontario (“AGCO”) for a liquor sales licence, with a capacity of 30 persons, for the indoor area of the premises. The Registrar’s concerns are that Mr. Diep holds a 45% share of the company and is listed as a Director and Secretary-Treasurer.
After careful consideration of the evidence and submissions, the Tribunal finds that Mr. Diep’s present and past conduct and the false statement in the application are reasonable grounds for belief that the Appellant’s business will not be carried on in accordance with the law and with integrity and honesty. As Mr. Diep has a beneficial interest in the business and shares in the responsibility for the management of the business, the Appellant is disentitled to a licence.
ISSUE
The issue that this Tribunal must decide upon is whether there are reasonable grounds to believe that the Appellant will not carry on its business as a liquor licensee, in accordance with law and with integrity and honesty, having regard to the past conduct of one of the Appellant’s shareholders.
EVIDENCE
As a preliminary issue, Ms. Taylor requested an order excluding witnesses. She requested that Ms. Castillo representing the Registrar be exempt from the order. .Mr. Dunstone requested that both of the Appellant corporation shareholders be allowed to remain in the hearing room to advise and instruct him during the proceedings. Ms. Taylor argued that one shareholder could suffice to advise and instruct Mr. Dunstone. As the greater part of the hearing will be devoted to the past conduct of Mr. Diep, the Appellant‘s other shareholder and witness should be excluded. The Tribunal ordered that procedural fairness to all parties would be better served by ordering all witnesses in the matter excluded, with the exception of Ms. Castillo and one of the Appellant’s shareholders. Mr. Dunstone advised that Mr. Diep would remain to advise him during the hearing.
Registrar’s Evidence
The Tribunal heard evidence from Detective Constable Nick Murray, Detective Sergeant Nicole McGetrick and Ms. Rebecca Castillo.
Detective Murray has been with the Alcohol and Gaming Commission of Ontario (“AGCO”) Enforcement Branch since February 2015. Previously, he was with the Ontario Provincial Police (“OPP”) for 10 years. In November, 2015, he was asked to obtain background information on Mr. Diep, a shareholder of Capital Barbershop, which had submitted an application to the AGCO for a liquor sales licence. The AGCO identified Mr. Diep’s criminal convictions and his failure to fully disclose all of his convictions on the application as areas of concern.
Detective Murray‘s evidence consisted of a detailed review of general occurrence reports obtained from Ottawa Police Service (Exhibits 5 to 11). He entered into evidence a summary of the record of convictions he prepared from the Canadian Police Information Centre (CPIC) official criminal record registered against Mr. Diep (Exhibit 4). His summary detailed each of the matters that resulted in convictions against Mr. Diep from 1999 to 2010. Detective Murray confirmed that Mr. Diep failed to disclose three convictions on the application for a licence.
On May 19, 1999, Mr. Diep was convicted of a charge of assault and was given a suspended sentence and probation for 18 months. On July 9, 1999, Mr. Diep was convicted of assault causing bodily harm and was placed on probation for 18 months and prohibited from owning or having firearms and explosives. On September 27, 1999, Mr. Diep was convicted of charges of robbery and dangerous operation of a motor vehicle. He was sentenced to two months incarceration and 18 months probation and was given a firearms, ammunition and explosives prohibition for 10 years. On December 11, 2002, Mr. Diep was convicted of assault and was given a fine of $1000.00 and probation for six months. Detective Murray stated this conviction was not disclosed on the application. On May 12, 2003, Mr. Diep was convicted of the following: 1) four charges of fail to comply with a recognizance, 2) fail to comply with a probation order and 3) fail to attend court. He was sentenced to 60 days incarceration on all charges. Detective Murray stated that Mr. Diep failed to disclose two of these charges. On September 3, 2009, Mr. Diep was charged with possession of a Schedule II substance for the purpose of trafficking. He was arrested with an organized group of individuals involved in trafficking marijuana. He was sentenced to nine months incarceration and a 10 year weapons prohibition order which expires in September, 2019. In December, 2009, Mr. Diep was released on parole. On October 29, 2010, Mr. Diep was convicted of driving with more than 80 mgs alcohol in blood. He was given a $1000.00 fine and prohibited from driving for one year.
In cross-examination, Detective Murray stated that he did not interview Mr. Diep for his investigation, he was asked only to provide background information on the concerns of the Registrar with regard to the application for a liquor sales licence. He acknowledged that Mr. Diep definitely made an effort to disclose his criminal convictions. He conceded that the 2003 conviction indicated as undisclosed on the Notice of Proposal was disclosed by Mr. Diep. He had stated on the application that it occurred in 2005. Nevertheless, Mr. Diep failed to disclose the 2002 conviction for assault which was a serious matter and two other convictions in 2003 related to the failure to abide to release conditions.
Detective McGetrick testified that she has been a police officer for 23 years and is currently working with the Ottawa Police Service. In November 2011, she had occasion to interview Mr. Diep in relation to a police investigation of a serious crime involving the death of a person who had previously been a co-accused with Mr. Diep in the 2002 conviction of assault. During the interview, she found Mr. Diep to be polite, but evasive in his answers. Mr. Diep admitted he had been friends with the deceased person for 10 years and conceded they had been involved in the drug trade. In the course of the interview, Detective McGetrick requested access to Mr. Diep’s cell phone messages to assist in her investigation. Mr. Diep agreed to allow her to peruse the text messages. When he gave her access to the cell phone, there was no record of any text messages. Mr. Diep admitted that he had deleted the messages prior to giving her access to the cell phone. Detective McGetrick stated that despite Mr. Diep’s actions, no charges were laid in this matter or any other matter related to the police investigation.
The Tribunal also heard from Rebecca Castillo, Manager of Liquor Eligibility at the AGCO with responsibility to review applications for licences. She stated that the Appellant has two main shareholders, Hoang Bao Diep and Ankur Vadhera, who each hold 45% interest in the business. The Registrar’s concerns are solely with Mr. Diep as part owner of the corporation. She testified that the primary reason for refusing a licence to the Appellant is Mr. Diep’s history of non compliance with conditions of probation and a recognizance, the nature of his criminal convictions and conduct which contain violent acts of behaviour and drug trafficking. Furthermore, a weapons and firearms prohibition order remains in effect until September, 2019. In addition, Mr. Diep was not fully truthful on the application, omitting a serious conviction for assault. She further indicated that in November, 2015, when the background information on Mr. Diep revealed that his disclosure of convictions was incomplete, the Registrar sent him a letter which provided him with the opportunity to add more information to the application. Mr. Diep failed to respond to the letter in a timely manner. His response was sent in February, 2016, after the Registrar had issued the Notice of Proposal to refuse a licence.
Ms. Castillo testified that the AGCO uses a risk-based licensing approach in assessing applications for liquor licences. In this case, the factors considered included the establishment’s location, the type of business, Mr. Diep’s past conduct and an ongoing eleven year pattern of criminal behavior, and the level of honesty on the licence application. Licence holders must conduct themselves with honesty and integrity and in accordance with the law to maintain the confidence of the public. Public safety is paramount and given the background information provided to the AGCO by Detectives Murray and McGetrick, the Registrar is not confident that the Appellant would or could ensure that the business is operated with honesty and integrity. Mr. Diep’s criminal background raises issues as to whether or not the liquor licence would be used to operate other illegal activities.
In cross-examination, Ms. Castillo indicated that each case is assessed on its own merits. There is no set rule as to what constitutes the number of years of good conduct before a licence would be granted. In this case, the Registrar’s review process suggested public risk concerns. She conceded that people can change; however, in the case of Mr. Diep and the significant role he plays in the operation of the business, more time and many different factors would have to be weighed by the Registrar to change the assessment. She conceded that Mr. Diep was not interviewed and the Appellant was not asked if they would consent to conditions on the licence that would critically address the risks associated with their business and identify how those risks would be mitigated. Although a barbershop is eligible to be licensed, she added that there is always a possibility that once licensed, the business could change and become a lounge.
Appellant’s Evidence
Mr. Dunstone advised the Tribunal he intended to call several character witnesses to testify on behalf of Mr. Diep. Unfortunately, due to work and personal commitments they were not able to attend the hearing. Accordingly, he requested that the Tribunal accept in evidence the following letters:
- a letter of support from BT, a co-worker of three years
- a letter from a friend, CW, who has known Mr. Diep for five years
- a letter of support from an assistant executive director of a half-way house, FL
- a reference letter from JH, a financial advisor of a major bank
- a letter of support from ME, a former co-worker
Ms. Taylor objected to these documents being admitted as exhibits because the authors of the documents were not being called as witnesses and could not therefore be cross-examined. The Tribunal overruled the objection and admitted the documents as Exhibit 14. The fact that the authors of these documents were not present to be cross examined would go to the weight to be given to the documents. The Tribunal also noted that there were documents such as the police occurrence reports referred to in the testimony of Detective Murray, the author(s) of which were not called as witnesses and subject to cross-examination by the Appellant.
The Tribunal heard evidence from Hoang Bao Diep and Ankur Vadhera, the principal shareholders of the Appellant.
Mr. Diep testified that he comes from a law abiding family. He became involved in criminal activity while in high school and as a result, did not complete his secondary education. For a period of 11 years, he associated with friends involved in criminal activity. Although he worked at various jobs, he had no career goal. In December, 2009, upon being released from jail and on parole, he began an unpaid six month internship as a barber. He trained with his current business partner, Mr. Vadhera. It was the beginning of a significant change in his life. He distanced himself from his former associates and worked as a barber at the same location for three years when the business closed. For the next two years, he supported himself with earnings from organized poker tournaments and online gaming. In November, 2015, he and Mr. Vadhera opened their new business, Capital Barbershop, which caters to a large variety of young and older clients. His financial investment in the business came from his savings and a loan from his parents. Mr. Diep stated that the barbershop is open six days a week from 11am to 9pm. As the hair business is very competitive and although selling liquor would be a very small part of the business, he and his partner believe that a liquor licence would attract more customers.
Mr. Diep explained that when he completed the application for a licence he believed he had included all of his convictions. With reference to the 2002 assault charge, he stated that at the time he pled guilty to numerous charges and he honestly thought the charge had been dropped. He did not purposely omit any charges from the application. He accepts that his past behaviour was wrong. He seeks to put his past behind him and move on with what he has achieved in the past five years. He has the support of his entire family and a good business partner and friend. He stated he has no gang affiliations and no alcohol or drug dependencies. The barbershop business is a large investment for him. A liquor licence will add to the success of the business and he would like the opportunity to prove that he has changed and will operate the business in accordance with the law and regulations. To this end, he would be willing to abide to strict conditions that the Registrar may deem appropriate in these circumstances.
In cross-examination, Mr. Diep was asked to provide additional detail to the 2011 interview with Detective McGetrick and his behaviour at the time. He stated he barely remembered the interview and added no further information to the testimony provided by Detective McGetrick. In further examination, Mr. Diep acknowledged that he wishes to remain a shareholder in the company as he has invested a great deal of effort, time and money in establishing the business.
Mr. Ankur Vadhera is a shareholder of the Appellant and shares the business interest and responsibilities equally with Mr. Diep. He stated that the barbershop opened seven months ago after several months of renovations and a significant financial investment by both partners. They employ four receptionists and have six barbers who work on a contract basis. The business has been generating sufficient income to pay expenses and salaries. However, they wish to expand their customer base and believe that a business model of selling alcohol is more modern and would attract more clients. Their current hours of operation would remain the same and they propose service of alcohol would be no later than 9:00pm. They anticipate selling five or six drinks a day.
Mr. Vadhera stated that Mr. Diep is an instrumental part of the business. He is responsible for the training of new barbers and devotes himself to ensuring that the daily operations run smoothly. They complement each other in the duties and have developed a positive and trusting working relationship. He stated that the business has been involved in many community events providing free haircuts to raise money for charitable organizations. The business is also seeking accreditation to offer a formal trade course in barbering.
In cross-examination, Mr. Vadhera indicated that he has known Mr. Diep for six years and first met him when he began his internship at his former barbershop. He acknowledged he was aware of some of Mr. Diep’s past criminal convictions. He has not known him to be in trouble with the law in the past six years. When asked by Ms. Taylor how he would react if other serious information about his criminal background came to his attention, he stated he would consider if it was real or not and discuss the information with Mr. Diep. He could not say how or if it would affect their working relationship.
In response to further questions from the Tribunal, Mr. Vadhera stated that Mr. Diep is devoted to his trade and the industry. He is skilled in his trade and the enjoyment he gets from his work has changed his life. He has been highly supportive of the barbershop and he considers him a great business partner and friend.
THE LAW
The relevant provisions of the Act for refusing to licence a corporate licensee are set out in Section 6 of the Act as follows:
Licence to sell
- (1) A person may apply to the Registrar for a licence to sell liquor.
Requirements
(2) Subject to subsection (4) or (4.1), an applicant is entitled to be issued a licence to sell liquor except if,
(c) the applicant or an employee or agent of the applicant makes a false statement or provides false information in an application under this Act;
(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:
The applicant.
An officer or director of the applicant.
A person who is interested in another person, as described in subsection 1 (2).
A person having responsibility for the management or operation of the business of the applicant.
APPLICATION OF LAW TO FACTS
Ms. Taylor submitted in her closing remarks that there is clear evidence that Mr. Diep, a shareholder of the Appellant corporation, has an 11 year record of criminal convictions and as late as 2011, he maintained ties with criminal associates involved in the illicit sale of drugs. The evidence from the interview with Detective McGetrick places doubt on whether Mr. Diep severed all ties with everyone involved in criminal activity. Although he testified that he could not remember the conversation, he did not deny his intent to further engage in an illicit activity. His failure to disclose all of his convictions on the application and his failure to respond to the Registrar’s request for additional information reflect a lack of honesty and integrity.
In support of the Registrar’s position to refuse a licence, Ms. Taylor cited the Court of Appeal in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon’s) 2013 ONCA 157. In this case, the Registrar issued a Notice of Proposal to revoke the Appellant’s liquor licence. The sole issue was whether the Appellant’s principal, Mr. Barletta membership in the Hells Angels was, in itself, sufficient to strip him of the privilege of holding a liquor licence. The Court of Appeal stated:
The standard of proof provided by s. 6(2)(d) of the Act is that of “reasonable ground for belief. As applied to this case, s.6(2)(d) of the Act required the Registrar simply to show that Mr. Barletta’s past or present conduct provides reasonable grounds for belief that he will not carry on business in accordance with law and integrity and honour. The Registrar does not have to go so far as to show that Mr. Barletta’s past or present conduct make it more likely than not that he will not carry on business as required.
The Court of Appeal further stated:
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). Past conduct that is not criminal could also provide the necessary reasonable grounds for belief.
Ms. Taylor further submitted that Mr. Diep’s character references, including his business partner have limited knowledge of his background and criminal record. Their evidence on his good character is in significant contrast to his criminal antecedents and the police evidence on Mr. Diep’s conduct when interviewed in 2011. She urged the Tribunal to give little weight to their evidence.
Ms. Taylor submitted that there is uncontested evidence in support of the Registrar’s position that there are reasonable grounds for belief that the operation of the business, with Mr. Diep having equal responsibility for the management of the operation, will not be carried on in accordance with law and with integrity and honesty and therefore the Appellant is disentitled to a licence. On the question of the imposition of terms or conditions, as there is an inherent difficulty in restricting and controlling Mr. Diep’s role in the operation of the business, if a licence were to be granted, the Registrar would not be satisfied with any involvement of Mr. Diep in the Appellant’s business, including working as a barber.
Mr. Dunstone submitted that Mr. Diep does not deny his past behaviour; however, what must be considered is what has happened in the past five years and his efforts at changing his lifestyle. Despite allegations put forth by the Registrar of illicit drug activity in 2011, no charges resulted from the interview with Detective McGetrick. He stated that the Tribunal heard no evidence that Mr. Diep has engaged in any conduct since October, 2010 that would demonstrate any difficulties with the law. He submitted that Mr. Diep is a changed person and he has made amends and wants to lead a law abiding lifestyle.
Mr. Dunstone submitted that Mr. Diep’s non-disclosure to the Registrar of the conviction of assault and two charges of failures to comply with court orders was not in any way deliberate. The application was not crafted to avoid giving information to the Registrar. It is possible that he may have forgotten these charges as they were interconnected with several other matters before the Court. He noted that he otherwise provided full disclosure and was forthright in his role with the Appellant. He testified without hesitation and was open and candid with the Tribunal. He further argued that the AGCO has no yardstick as to what constitutes years of good conduct. Mr. Diep has learned from his past mistakes and wants a good future. He has demonstrated good conduct for five years and is devoted to a new career. He and his business partner are committed to operate the Appellant business in accordance with the law and with integrity and honesty.
In concluding his submissions, Mr. Dunstone urged the Tribunal to consider that Mr. Diep is a changed person and enough time has passed since his last criminal conviction. Furthermore, if the Tribunal has concerns, it could impose terms and conditions deemed appropriate to the circumstances, on the Appellant’s licence.
Section 6(2)(d) and (3) directs the Tribunal to examine the honesty and integrity of Mr. Diep, and address the fact that as a shareholder of the Appellant, he has a serious criminal record and he failed to disclose three convictions on the application.
As for the Registrar’s position that non-disclosure of the 2002 convictions gave rise to Mr. Diep making a false statement in the application, Mr. Diep stated that he believed those convictions had been merged with others and that he did not purposely leave them out. Although he identified the omissions in a letter he sent to the Registrar after the Notice of Proposal was issued, he ought to have been more diligent. A timelier response may have been of greater assistance to the Registrar in reviewing the application.
The Tribunal acknowledges that Mr. Diep’s business partner described him as a good partner who is highly devoted to his trade. During the six years he has known him he considers him to be a responsible person who is well liked by his customers. Although he is aware of some of his criminal past, he now knows him as a respectful person who has changed his associates and lifestyle. In regard to the five letters of support of Mr. Diep entered into evidence, the Tribunal would have been better assisted in considering this evidence, if the witnesses had testified at the hearing. Accordingly, the Tribunal put significantly less weight on these letters than on the oral evidence which was tested on cross-examination. Nevertheless, it is noteworthy that the authors of the letters, who have known Mr. Diep for three to five years, all speak about his hard work and commitment to provide good service.
This case involves a consideration of many factors and must take into account the whole of Mr. Diep’s past behaviour. The character of Mr. Diep’s past criminal convictions, which involved violence and the illicit sale of drugs, is a serious consideration. The evidence of Detective McGetrick indicates further troubling facts. Although no charges resulted from this matter, a possible conclusion that the Tribunal can make on the evidence, is that in 2011, Mr. Diep was still on the periphery of criminal activity, despite his stated efforts at changing his behaviour and associates. The evidence was not disputed by Mr. Diep, claiming only that he did not remember much of the interview. The Tribunal agrees with Counsel for the Registrar that past conduct that is not criminal can also provide the necessary reasonable grounds for belief that the business will not be carried on in accordance with the law and with integrity and honesty. The matter is serious enough that the Tribunal cannot simply ignore the evidence.
The Appellant has been operating a barbershop business for seven months. The Tribunal accepts that the business wishes to expand its customer base through the sale of alcohol on its premises and the shareholders have made a great investment of time and money into the business. However, the barbershop is their primary business and their income will continue to be derived from this industry whether or not they are issued a licence. The Tribunal finds it commendable that Mr. Diep has in the past five years shown efforts to lead a law abiding lifestyle. Nevertheless, these efforts, however sincere they may be, cannot, at this time, override his past criminal convictions.
Considering the shareholder agreement of the Appellant corporation, Ms. Taylor stated that the Registrar would not support a licence with conditions, as such conditions would be difficult to enforce given Mr. Diep’s involvement in the business operations. The Tribunal considers this to be a reasonable concern, in the circumstances of this case.
Accordingly, granting a liquor sales licence on terms and conditions would not address the Registrar’s concerns given the facts before the Tribunal.
In considering the totality of the evidence the Tribunal finds, pursuant to clause 6(2)(d) of the Act, that the past conduct of Mr. Diep, as a shareholder having beneficial interest and responsibility for the management of the business, affords reasonable grounds for belief that the Appellant will not carry on business in accordance with the law and with integrity and honesty.
The Tribunal is mindful that under the Act, the Appellant has the opportunity to re-apply in two years. If Mr. Diep is in a position to bring forward evidence of sustained good conduct, the Appellant may wish to re-apply at that time.
ORDER
Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs the Registrar to carry out the Proposal refusing to issue a licence to the Appellant.
Licence Appeal Tribunal
__________________________
Genevieve Blais, Member
Released: June 17, 2016