Appeal From an Order of the Registrar, Alcohol, Gaming and Racing under the Alcohol and Gaming Regulation and Public Protection Act, 1996, S.O. 1996, c. 26, Sch. to Impose a Monetary Penalty.
Between:
Moda Nightlife & Bar Inc., o/a Moda Nightlife and Bar Appellant
-and-
Registrar of Alcohol, Gaming and Racing Respondent
DECISION and ORDER
ADJUDICATOR: Stephen Scharbach, Member
APPEARANCES:
For the Appellant: Philip Morris, Counsel
For the Respondent: Faye Kidman, Counsel
Heard in Toronto: November 7 & 8, 2018
OVERVIEW
1This is an appeal by Moda Nightlife & Bar Inc. (“Moda”) from an order of the Registrar, Alcohol, Gaming and Racing (“Registrar”) to impose a monetary penalty of $3,000.
2Under the Alcohol and Gaming Regulation and Public Protection Act1 (AGRPPA), the Registrar may impose monetary penalties with respect to contraventions of certain regulations made under the Liquor Licence Act.
3In an order dated May 1, 2018, the Registrar imposed a $3,000 penalty on Moda for contravening a regulation that prohibits a liquor licence holder from engaging in or permitting “practices that may tend to encourage patrons’ immoderate consumption of liquor.”
4The Registrar alleges that Moda contravened that regulation by permitting patrons to pour alcohol from bottles of spirits directly into their mouths and into the mouths of other patrons.
ISSUES
5Did Moda permit the practice of patrons pouring spirits directly from bottles into their mouths and/or the mouths of other patrons?
6If so, does that practice tend to encourage the immoderate consumption of alcohol?
DECISION
7Moda permitted the practice of patrons pouring spirits directly from bottles into their mouths and/or the mouths of other patrons.
8In the circumstances of this case, that practice tends to encourage immoderate consumption of alcohol if the bottle did not have a pour spout, or had a pour spout that allows spirits to flow continuously and unmeasured.
9If the bottle had a pour spout that restricts the amount of spirits dispensed to one measured ounce at a time, the practice of drinking from a bottle did not inherently tend to encourage immoderate consumption.
10In this case, the Registrar’s evidence did not establish on a balance of probabilities that the bottles had no pour spouts or spouts that allowed a continuous unmeasured flow of spirits.
11I therefore conclude that the contravention has not been proved on a balance of probabilities and the Registrar’s monetary penalty order is set aside.
LAW
12Under s. 14.1(1) of the AGRPPA, the Board of the Alcohol and Gaming Commission of Ontario (“Commission”) may establish a schedule of monetary penalties that may be imposed with respect to contraventions of those Acts and regulations administered by the Commission that are prescribed by regulation.
13Ontario Regulation 15/16 made under the AGRPPA prescribes several Acts and regulations for the purposes of s. 14.1(1).
14One of those Regulations is Ontario Regulation 719, made under the Liquor Licence Act. Section 20(1) of that Regulation states:
The holder of a licence to sell liquor shall not engage in or permit practices that may tend to encourage patrons’ immoderate consumption of liquor.
15The Commission has established a schedule of monetary penalties that may be imposed in respect of a contravention of each prescribed provision and, according to that schedule, a monetary penalty of up to $6,000 may be imposed in respect of a contravention of s. 20(1) of O. Reg. 719/90.
16Under section 14.1(2) of AGRPPA, monetary penalties are imposed by the Registrar. A person on whom a monetary penalty is imposed may appeal the Registrar’s penalty to this Tribunal (s.14.1(5)). At an appeal, the onus is on the Registrar to prove the contravention on a balance of probabilities.
17After holding a hearing, the Tribunal may either confirm the monetary penalty or set it aside (s. 14.1(7)). The Tribunal does not have the authority to vary the amount of the penalty.
THE ALLEGED CONTRAVENTION
(a) Moda Nightlife and Bar
18Moda operates a nightclub/event space in Toronto. According to the testimony of Moda’s manager, Omar Saba, Moda has a dance floor and sophisticated light and sound systems. Music is provided by a DJ. The dance floor is located on the main level and that level has a bar and a licenced capacity of 400. There is a mezzanine level overlooking the dance floor containing VIP booths that are available to patrons at extra charge. The mezzanine level has an additional licenced capacity of 86.
19Moda operates a “bottle service”, meaning that instead of buying individual drinks, groups of patrons can purchase bottles of spirits such as rum, vodka, or cognac. The bottles are served to the patrons with glasses and mix and patrons are free to serve themselves and pour their own drinks.
(b) Evidence in Support of the Contravention
20On May 1, 2018 the Registrar issued an order imposing a $3,000 monetary penalty on Moda for contravening s. 20(1) of O.Reg.719/90.
21The facts the Registrar relied upon to establish the contravention were provided at the appeal hearing through the sworn testimony of Raman Sharma, a senior Commission inspector.
22According to Mr. Sharma, he conducted an inspection of Moda on November 25, 2017. He testified that he arrived at Moda at approximately 12:30 am. He entered through the main doors, passed through the vestibule and coat check areas, entered the main floor area, and made observations from just inside the doors to the main floor.
23Mr. Sharma testified that he saw three servers bring four bottles of Hennessey cognac and one bottle of Grey Goose vodka to a group of people standing around a table just to Mr. Sharma’s left. According to Mr. Sharma he was standing 4-6 feet away from the group.
24He testified that once the servers gave the bottles to the patrons, he observed four male patrons pour liquor directly from the bottles into their mouths and one of the patrons’ poured liquor directly into the mouth of another patron.
25A few minutes later, servers brought four more bottles to another group on the main floor. According to Mr. Sharma he also observed those patrons pour liquor from the bottles directly into their mouths.
26Mr. Sharma stated that in the case of both groups of patrons, the servers who had just delivered the bottles were standing directly in front of the patrons as they were drinking from the bottles. The servers did nothing to intervene. Mr. Sharma also stated that security personnel were standing close to him and, like Mr. Sharma, had a clear view of the patrons’ behaviour. Mr. Sharma noted that the DJ, located some distance away, apparently saw what occurred and commented over the sound system, “wow – look at those bottles being popped!”
27Mr. Sharma testified in chief that all of the bottles were equipped with pour spouts. According to Mr. Sharma there are two types of pour spouts. One type allows for the unrestricted, unmeasured flow of spirits from the bottle. The other type limits the amount of spirits that can be poured to one ounce at a time. The bottle has to be repositioned upright before the pour spout will dispense another single ounce of liquor.
28According to Mr. Sharma’s testimony in chief, from his observation the pour spouts that were in use during his inspection on November 25, 2017 were of the first type – they allowed for the unrestricted, unmeasured flow of alcohol from the bottles into patrons’ mouths. He testified that he would have had no concern if the pour spouts had been of the type that limited the pour to one ounce because the patron would receive a measured amount of spirits instead of a free flowing, unmeasured amount.
29In cross-examination however, Mr. Sharma testified that while he believes the pour spouts in use were the limiting type, he was not sure and did not inspect the pour spouts to confirm his impression. He testified that he could not say whether the pour spouts were of the limiting type or not.
30Mr. Sharma testified that he observed unrestricted and unmeasured pouring of spirits from bottles directly into patrons’ mouths at Moda on earlier occasions. This evidence was admitted as relevant to the issue of whether the conduct observed November 25, 2017 was an isolated incident or indicative of a practice at Moda.
(i) December 19, 2015 - Mr. Sharma observed approximately 16 patrons consuming spirits directly from the bottle and/or pouring spirits directly from the bottle into the mouths of another patron. That incident led to the imposition of an agreed monetary penalty of $1500.
(ii) September 11, 2016 - Mr. Sharma testified that while on an inspection he observed a male patron on the main floor, among a group of others, pouring liquor from a Hennessey bottle directly into his mouth. Security staff were nearby.
Mr. Sharma proceeded to the second-floor area where he observed another patron drinking directly from a bottle. According to Mr. Sharma, although the bottle was equipped with a pour spout it allowed the spirits to flow freely and unmeasured. He stated that he observed a second male individual drink directly from another bottle without a pour spout. Mr. Sharma stated that he observed this while a security staff member was standing next to him. No staff member intervened.
(iii) March 12, 2017 - Mr. Sharma testified in chief that on an inspection he observed a male on the second floor of the club drinking directly from a bottle of Bacardi rum and pouring spirits from that bottle into the mouths of other patrons. He stated that the bottle had a pour spout on it but the liquor appeared to flow freely and unmeasured. Security staff were nearby and had a clear view but no staff member intervened.
Mr. Sharma testified that he also saw another male drink directly from a bottle of Grey Goose vodka. According to Mr. Sharma, the spirits appeared to flow freely from the bottle, unrestricted and unmeasured. Security staff were nearby but did not intervene.
(iv) September 23, 2017 - Mr. Sharma testified that he arrived at just after 2:00 am and observed patrons drinking from bottles on the main floor. He mentioned seeing a man drink unmeasured, unrestricted spirits from a Grey Goose vodka bottle with a pour spout and another patron drinking from a Hennessey bottle. According to Mr. Sharma, Moda staff were in the immediate vicinity and the drinking would have been as visible to the staff as it was to him.
31In cross-examination, Mr. Sharma testified that he observed no signs of intoxication, could not say whether any patron drank more than once from a bottle, was not sure whether the pour spouts in use were the limiting type, and did not inspect the pour spouts to confirm his impressions.
ANALYSIS
32Moda’s counsel states that the Registrar’s monetary penalty order should be set aside for two main reasons:
33Firstly, section 20(1) was intended to prohibit practices that involve low pricing or complimentary alcohol. It was never intended, and should not be interpreted, to apply to the conduct at issue in his case.
34Secondly, the onus is upon the Registrar to prove on a balance of probabilities all of the facts that establish the contravention.
35Based on the wording of the regulation there are three elements that must be proved in order to establish a contravention (see paragraph 36 (b) to (d). Moda’s counsel argues that the Registrar has failed to prove all three of those elements.
36Thus, this appeal raises four issues:
(a) Does s. 21(1) apply to the conduct at issue in this case?
(b) Did Moda “permit” the practice of patrons drinking directly from bottles of spirits?
(c) Was the behaviour in question a “practice” at Moda
(d) If so, did that practice tend to encourage immoderate consumption of liquor?
37The following sections contain my analysis and conclusion with respect to each of the four issues.
(a) The Scope of Application of s. 20(1)
38Moda’s counsel argues that the application of s. 20(1) is restricted to practices that involve low pricing or complimentary alcohol. In support of that argument I was referred to both the text of s. 20 itself and legislative amendments to the provision over approximately the last 15 years.
39In my view the plain, ordinary meaning of the words used in s. 20(1) do not restrict or imply a restriction of the application of s. 20(1) to matters involving complimentary alcohol or pricing. I conclude that s. 20(1) is broad enough to encompass the conduct at issue in this case.
40With respect to the text of s. 20, subsections (1) to (3) read as follows;
20.(1) The holder of a licence to sell liquor shall not engage in or permit practices that may tend to encourage patrons’ immoderate consumption of liquor.
(2) Without restricting the generality of subsection (1), the licence holder shall not advertise the availability of complimentary liquor and may supply complimentary servings of liquor only in circumstances that are consistent with not encouraging the immoderate consumption of liquor and only for the purpose of customer relations.
(3) Without restricting the generality of subsection (1), the licence holder shall not offer for sale a serving of liquor for less than a total purchase price of two dollars, including retail sales tax, goods and services tax and any other applicable taxes.
41Section 20 contains a total of 7 subsections and all of them are concerned in one way or another with pricing. According to counsel, subsections 2 and 3 provide specific examples of practices that tend to encourage immoderate consumption - subsection 2 prohibits advertising and restricts supplying complimentary alcohol, and subsection 3 prohibits charging less than $2 for a serving of liquor.
42Counsel pointed out that the Divisional Court has stated that although subsections 2 and 3 are stated not to restrict the generality of subsection 1, they inform its interpretation2. Counsel argues that when read in conjunction with the rest of section 20, subsection (1) is intended to be a “catch all” provision meant to capture and prohibit pricing and giveaway schemes that do not fall within the specific ambit of the other subsections. In other words, the application of subsection (1) is restricted to licensee practices that relate to pricing or complimentary liquor.
43In support of that argument counsel points to amendments to s. 20 that have been made over approximately the last fifteen years. He states that throughout that period and despite several amendments, the section has always been concerned with pricing and complimentary liquor.
44He argues that the Registrar is attempting to stretch the application of 20(1) beyond its intended scope to regulate rate and volume of alcohol consumption – something that he asserts has never been regulated.
45I acknowledge that despite several amendments, s. 20 has contained and continues to contain subsections that deal with pricing and complimentary alcohol.
46However, following subsection (1), all of those subsections (effectively) begin with the words, “Without restricting the generality of subsection (1)…”
47The plain, ordinary meaning of the words “shall not engage in or permit practices that may tend to encourage patrons’ immoderate consumption” do not contain or imply any restriction of their application to situations involving low pricing and free alcohol and all of the subsections of s. 20 are specifically stated not to restrict the general scope of application of s. 20 (1).
48I note that one of the decisions referred to me concluded that a contravention of s. 20(1) occurred in circumstances that did not involve low pricing or complimentary liquor and whose factual circumstances bear some similarity to the present case.3
49In that case, the licensee served two pitchers of beer to patrons who disagreed as to who could drink the most. The patrons drank the beer directly from the pitcher in view of the bartender. The Ontario Liquor Licence Board (the “Board”) found that the bartender knew what was going on and permitted it. The Board concluded that the licensee permitted a practice that tended to encourage immoderate consumption and thereby contravened s. 20(1).
50The obvious intention of s. 20(1) is to discourage immoderate consumption of alcohol by prohibiting practices that encourage it. Considering the plain meaning of the words used, and the legislative intent of s. 20(1), I interpret s. 20(1) broadly as applying to any practice that tends to encourage immoderate alcohol consumption, including but not restricted to, practices related to pricing and complimentary alcohol.
(b) Element # 1 - Did Moda “Permit” Drinking Directly from Bottles?
51I find on a balance of probabilities that on the occasions described above, Moda permitted patrons to pour spirits from bottles directly into their mouths or the mouths of other patrons (referred to at Moda as “free pouring”).
52Moda’s counsel relies upon an Ontario Court of Appeal decision4 which held that a contravention of a regulation prohibiting a licence holder from permitting drunkenness on the premises requires more than just proof of failing to prevent drunkenness. It requires proof that the licensee knew or ought to have known of drunkenness on the premises.
53Counsel argues that similarly a contravention of s. 20(1) - permitting a practice that may tend to encourage immoderate alcohol consumption - requires proof that the licence holder knew or ought to have known that free pouring took place and did not stop it.
54I accept that submission. In order to conclude that Moda permitted free-pouring, the Registrar must prove on a balance of probabilities that Moda knew or ought to have known that free pouring took place.
55Moda’s counsel argued that the evidence that Moda staff knew or ought to have known of free pouring is unconvincing. Although Mr. Sharma testified that each time he observed patrons drinking directly from bottles, Moda staff were nearby and had a clear view, he could not testify as to what they actually observed.
56I accept Mr. Sharma’s uncontradicted evidence that on November 25, 2017 (the date of the alleged contravention), as well as on the 4 earlier occasions, he observed patrons drinking directly from bottles of spirits. I also accept his uncontradicted evidence that during the November 25 incident Moda staff were standing directly in front of the patrons as they free-poured, and more likely than not saw what occurred. They took no steps to intervene, and thereby permitted the behavior.
57Similarly, on the four earlier occasions described by Mr. Sharma I accept his uncontradicted evidence that Moda staff were nearby and, more likely than not, observed patrons drinking directly from bottles just as Mr. Sharma did.
58I conclude that Moda’s staff knew or ought to have known that free pouring took place on those occasions, took no steps to stop it and thereby permitted it.
(c) Element #2 - Was Free Pouring a “Practice”?
59Moda’s counsel argued that s. 20(1) of O, Reg. 719 prohibits engaging in or permitting a “practice” that tends to encourage immoderate alcohol consumption. In this case, if free pouring took place at Moda, Moda’s counsel argued that it should not be regarded as a “practice”. Moda had a policy prohibiting free pouring and if it occurred, it occurred sporadically, only on occasion, and did not amount to a practice.
60With respect to Moda’s policy regarding free pouring, Mr. Saba testified that:
- Moda’s policy is to prohibit free pouring
- There is a sign on the wall at the entrance where the entrance fee is collected that says “absolutely no free pour from bottle”
- When a bottle is brought to a table the bottle server is supposed to explain Moda’s policy prohibiting free pouring
- The prohibition against free pouring is also stated in a sign in sheet that must be read and initialed by the person who made the reservation
- Servers are supposed to warn patrons if they observe free pouring and if it occurs again security staff are supposed to take the bottle away.
61I acknowledge that Moda has a policy against free pouring and that efforts are supposed to be made to bring that policy to the attention of patrons. However, stated policy is one thing and actual practice is another. Practices may develop in spite of policy especially if the policy is not enforced consistently. In this case, evidence of the actual conduct, rather than stated policy, is more relevant to a determination of whether the conduct amounted to a practice.
62With respect to frequency of the conduct, Mr. Sharma testified that he observed drinking from bottles on 5 occasions over a 23-month period. Mr. Sharma testified that he inspected the premises approximately twice per month so he apparently observed the behavior 5 times in approximately 46 inspections. Moda’s counsel argues that this indicates that the behavior occurred only sporadically and occasionally and therefore cannot be regarded as a practice.
63In my view, conduct that occurs repeatedly can be regarded as a practice, even if it occurs irregularly or intermittently. In this case, free pouring was noted by the inspector on four occasions before the November 25, 2017 incident which prompted the Registrar’s monetary penalty order. In my view, the fact that free pouring occurred repeatedly at Moda establishes that it was a practice.
64The cases to which I was referred suggest that a “practice” can be proved in different ways. Several cases state that simply serving drinks, even in excessive amounts, does not amount to a practice. They suggest that there must be something more such as a policy, a special program, a promotion, or that the conduct occurred on prior occasions.
65In that connection I note that the Alcohol and Gaming Commission stated in the case of Seneca Restaurant & Lounge (Re)5:
Finally, the Board has considered the allegation of a breach of s. 20(1) of Revised Regulation 719/90 … and while it does appear that the low pricing practices of the licensee may well have encouraged patrons’ immoderate consumption of liquor on this evening, we are not prepared in this instance to make a finding of breach in the absence of evidence of prior problems…In the event of a similar occurrence with such low prices, the Board might take a different view of the licensee’s responsibility under the requirement of s. 20(1) of the Regulation. [emphasis added]
66A similar view was expressed more recently by this Tribunal in 2396919 Ontario Inc. (c.o.b. Brixton Social) (Re)6:
To encourage immoderate consumption, the Appellant must do something more than simply serve drinks in response to orders from patrons, which is, after all, its business. It must have a practice or a program that encourages immoderate consumption. The Registrar argues that the required practice is serving large numbers of drinks at last call. To accept that submission, the Tribunal needs evidence that this behavior occurred regularly, as a matter of policy or that there was a special promotion. [emphasis added]
67These cases suggest that while a single instance of questionable conduct may not be regarded as a “practice”, repetition of the behaviour may be indicative of a practice.
68In this case, the allegation is that Moda permitted a practice – free pouring – that tends to encourage immoderate consumption of alcohol. The evidence establishes on a balance of probabilities that Moda staff permitted free pouring on November 25, 2017, as it did on four earlier occasions.
69That conduct did not happen once, it happened repeatedly. Moda was aware that it occurred and it occurred often enough that Moda established a policy to prohibit it. I find that despite that policy Moda staff allowed it to occur on repeated occasions. In my view, that meets the test of permitting a “practice”, even if that practice took place occasionally and irregularly.
(d) Element # 3 - Does Free-Pouring Tend to Encourage Immoderate Consumption of Alcohol?
70In order to conclude that s. 20(1) has been contravened, I must conclude that the practice of drinking directly from the bottle tends to encourage immoderate consumption of alcohol.
71Both the inspector and counsel for the Registrar stated that the aspect of drinking directly from the bottle that encourages immoderate consumption is the fact that the spirits flow freely from the bottle, without restriction and unmeasured.
72This of course assumes that the bottles are not equipped with the type of pour spout that limits the amount of alcohol to one ounce at a time. There is no evidence that drinking measured amounts directly from a bottle inherently encourages immoderate consumption. I agree with Moda’s counsel that there is little practical difference between a patron pouring a measured ounce of spirits into a glass and drinking it and the patron pouring a measured ounce of spirits into his/her mouth directly from the bottle. Mr. Sharma tacitly acknowledged that when he testified that if the bottles were equipped with pour spouts that only dispense one ounce per pour, he would not have an issue with it.
73However, drinking directly from the bottle without any pour spout or with an unrestricted pour spout is a different matter. Responsible consumption of alcohol requires that patrons know their limit and stay within it. Logically, free pouring without a spout that limits the spirits dispensed to discreet measured amounts prevents patrons from knowing precisely how many units of alcohol they have consumed and makes it difficult for patrons to monitor their own consumption and stay within their limit.
74In addition, licensees are expected to monitor patrons’ consumption of liquor. Free pouring without a limiting spout means that staff have no accurate way of knowing the amount of spirits consumed making monitoring more difficult, if not impossible.
75I therefore conclude that in the circumstances of this case the practice of free pouring without a limiting type of spout tends to encourage patrons’ immoderate consumption of alcohol; however, free pouring with a limiting type of pour spout does not by itself tend to encourage immoderate consumption.
76The Registrar’s case thus comes down to the factual question of whether the bottles from which the patrons directly drank had the limiting type of pour spout or not. In order for a contravention of s. 20(1) to be proved in this circumstance, the Registrar must establish on a balance of probabilities that there were no pour spouts on the bottles, or pour spouts that allowed spirits to flow continuously and without restriction.
77Under cross-examination Mr. Sharma testified that he thought the pour spouts he observed on November 25, 2017 were the free-flowing type but he was not sure and he did not do an inspection to check. Similarly, he testified in cross-examination that he was not sure if the bottles that patrons drank directly from on the other occasions had the limiting type of pour spout.
78Mr. Saba testified that Moda uses the limiting type of pour spout and in support of that provided an invoice indicating that 12 of those spouts were purchased by Moda.
79Mr. Saba’s evidence does not establish that limiting pour spouts were in use on the occasions observed by Mr. Sharma. However, given that evidence, together with Mr. Sharma’s testimony that he was not sure whether the pour spouts were of the limiting type or not, the Registrar has not satisfied the onus on it of proving a contravention on a balance of probabilities.
80I therefore conclude that a contravention of s. 20(1) of O. Reg. 719 has not been proven.
ORDER
81Pursuant to s. 14.1(7) of the Alcohol Gaming Regulation and Public Protection Act, I set aside the Order of Monetary Penalty # 872343 dated May 1, 2018 issued by the Registrar of Alcohol and Gaming against Moda Nightlife & Bar Inc.
LICENCE APPEAL TRIBUNAL
Stephen Scharbach, Member
Released: December 20, 2018
Footnotes
- On October 17, 2018 the name of the Act was changed to the Alcohol, Cannabis and Gaming Regulation and Public Protection Act.
- 2130845 Ontario Inc. o/a Heart & Crown v. Ontario (Alcohol and Gaming Commission, Registrar) , 2014 ONSC 3595 (Div. Ct.) at para 38.
- Gordon Street Arena (Re), [1997] O.L.L.B.D. No. 383
- 1213963 Ontario Ltd. (Sin City Bar and Eatery) v. Ontario (Alcohol and Gaming Commission), 2009 ONCA 323
- [1999] O.A.G.C.D. No 75, at para 33
- 2396919 Ontario Inc. (c.o.b. Brixton Social) (Re), [2016] O.L.A.T.D. No. 107, (Ontario Licence Appeal Tribunal), at para 21.