Licence Appeal Tribunal
Appeal from Notice of Proposal of the Registrar of Alcohol, Gaming and Racing under section 15 of the Liquor Licence Act, R.S.O. 1990, c. L.19, to review a Liquor Licence.
Between:
Yongehurst Distillery Corp. Appellant
and
Registrar of Alcohol, Gaming and Racing Respondent
and
A.K. and K.B. Added Parties
MOTION ORDER
Adjudicator: Laurie Sanford, Vice-Chair
Appearances:
For the Appellant: John-Paul Sacco and Rocco Panacci, Agents For the Respondent: Faye Kidman, Counsel For the Added Party A.K.: Ian Flett, Counsel For the Added Party K.B.: Self-Represented
REASONS FOR MOTION ORDER
OVERVIEW
1Yongehurst Distillery Corp. (“Yongehurst”) brought this motion for costs at the conclusion of a hearing to review Yongehurst’s application for a liquor licence. Yongehurst manufactures spirits and applied for a liquor licence for its premises. The Deputy Registrar of Alcohol, Gaming and Racing (the “Registrar”) received objections to the liquor licence application and, on March 29, 2017, issued a Notice of Proposal to review the application.
2There were two objectors to Yongehurst’s application, A.K. and K.B. They were added as parties to this proceeding and may be collectively referred to as the “Added Parties”. The hearing in this matter took place over 10 days from November 21, 2017 to February 15, 2018. The Decision and Order was released on March 28, 2018. The Tribunal directed the Registrar to approve Yongehurst’s application for a liquor licence, subject to certain terms and conditions.
3Yongehurst’s motion for costs is made on the grounds that the Added Parties to this proceeding conducted themselves unreasonably, frivolously, vexatiously or in bad faith. Yongehurst does not claim costs against the Registrar.
4I acknowledge that this proceeding took longer than is usually the case. I acknowledge, with regret, that the lengthy process caused Yongehurst financial hardship. However, for the reasons set out below, I find there are no persuasive reasons to award costs as Yongehurst requests.
ISSUES AND ANALYSIS
5This motion is brought under Rule 19.1 of the Licence Appeal Tribunal Rules of Practice and Procedure, Version I (April 1, 2016) which states, “Where a party believes that another party in a proceeding has acted unreasonably, frivolously, vexatiously, or in bad faith, that party may make a request to the Tribunal for costs.” The Tribunal’s costs rule is both narrow and specific. Unlike costs in civil proceedings, costs in proceedings before the Tribunal are awarded based on the conduct of the parties. The award of costs lies in the discretion of the Tribunal.
6Yongehurst’s costs motion against the Added Parties may be summarised as consisting of five grounds of alleged conduct as follows:
a. The Added Parties did not comply with Tribunal Orders concerning disclosure;
b. The Added Parties acted in bad faith in delaying these proceedings both before the hearing commenced and during the hearing;
c. The Added Parties refused to negotiate a settlement in this matter, prolonging the proceedings;
d. The Added Parties engaged in harassment and damaged Yongehurst’s reputation by actions before and during the hearing;
e. The Added Party K.B. put forward a case based on evidence which was shown to be incomplete, out of date and irrelevant; and
f. The effect of all of these alleged actions by the Added Parties has been to impose substantial financial hardship on Yongehurst.
Compliance with the Tribunal’s Orders concerning disclosure
7The Added Parties did fail to meet the Tribunal’s deadline for disclosure set in a Case Conference that occurred in August, 2017. However, the Added Parties submitted that they did not receive the Case Conference Order in time to comply with it. While the parties have an obligation to comply with the terms set in a Case Conference regardless of whether they have received the written Order or not, when I assumed carriage of this matter Yongehurst and the Added Parties advised they each had further disclosure they wished to make. On this basis, by Order made November 22, 2018, I set new disclosure dates for all parties. Therefore, while there was non-compliance with the original Order, it may be said that there were mitigating circumstances. The new disclosure dates I set were met. Accordingly, I find that the failure to meet the original dates does not, in itself, justify the award of costs.
Bad Faith in delaying the hearing both before and during the hearing
8Mr. Flett, counsel for the Added Party A.K., submits that the pre-hearing conduct of the Added Parties was canvassed during a motion to dismiss the proceeding brought by Yongehurst at the outset of the hearing and, since I found that it did not meet the standard of conduct required to dismiss the proceeding without a hearing, that the subject ought not to be revisited. However, a dismissal of the proceeding without a hearing lies where the proceeding itself is found to be unreasonable, frivolous, vexatious or in bad faith. In the present motion what is relevant is the conduct of the individual parties.
9By way of background, A.K. brought a motion to adjourn this matter on the grounds that he had not had sufficient time to retain counsel and adequately prepare for the hearing. The motion was denied by an Order dated November 20, 2017. A.K., his counsel and the second added party, K.B., were not in attendance at the motion.
10The hearing commenced on November 21, 2017. At the outset, A.K. renewed his motion to adjourn on the grounds that his counsel, Mr. Flett, was not available for all the dates set for the hearing and that he had not made all the disclosure he wished to. Mr. Flett was not in attendance at the hearing of this motion but did send an associate. I granted an adjournment of the hearing dates by Order dated November 22, 2017.
11Yongehurst submits that the delay caused by A.K.’s earlier inaction in retaining counsel who could attend on the scheduled hearing dates unnecessarily delayed and prolonged the proceedings. Yongehurst also submits that the Added Parties acted in bad faith by failing to attend a hearing in support of their motion to adjourn.
12It is important to note that until the hearing commenced, both the Added Parties and Yongehurst were self-represented. The Tribunal customarily allows greater leeway in dealing with self-represented parties to permit them to participate in a meaningful way in the process. I find that this conduct in failing to retain counsel in a timely way, in seeking an adjournment and failing to attend the hearing of the adjournment motion and seeking a further adjournment at the outset of the hearing is unfortunate but does not rise to the level of bad faith as alleged by Yongehurst. In making this finding, I am mindful of the fact that the adjournment ultimately granted was of short duration. The hearing was originally scheduled to begin on November 21, 2017 and end on December 7, 2017. The Order dated November 22, 2018 directed the hearing to commence on November 30, 2017 and conclude on January 24, 2018. This is not evidence of an intent to deliberately delay the proceedings.
13Yongehurst also submits that the Added Parties delayed during the hearing by occasionally arriving late, being disorganised in presenting their evidence and introducing evidence that was irrelevant. The specific issue of the evidence K.B. submitted will be considered below. While there were delays in the hearing, they were not unusual. As K.B. noted, Yongehurst requested an early end to more than one day to permit it to organize its cross-examination and evidence. I find no persuasive evidence that either of the Added Parties was acting unreasonably, frivolously, vexatiously, or in bad faith in the timing of the hearing.
Refusal to Negotiate a Settlement
14Yongehurst submits that the Added Parties’ refusal to negotiate a settlement in this matter unduly prolonged the process. Yongehurst submits that the conditions proposed by A.K. as a proposed settlement were so unreasonably restrictive as to not constitute a legitimate offer. K.B. advised that no condition would be acceptable to her. Yongehurst noted that I encouraged the parties to enter into settlement discussions on November 21, 2018. However, a party is under no obligation to settle an appeal or to negotiate to settle the matter. Our system permits each party to have his or her “day in court” without consequences as to cost. Therefore, this ground for costs must fail.
Harassment and actions damaging Yongehurst’s reputation
15Yongehurst submits that A.K. circulated a letter to the neighbourhood prior to this proceeding making unfounded accusations about how the operation of a licensed premises might affect the neighbourhood. Having reviewed the contents of this letter, I find that it is not unreasonable and does not rise to the level required for the award of costs. Concerning K.B., Yongehurst alleges conduct including calls to the fire department and to the Toronto Municipal Licence Standards branch concerning possible violation of zoning by-laws. K.B. denies calling the fire department directly and submits that she was acting within her rights to call the Toronto Municipal Licence Standards branch to enquire if Yongehurst was in compliance with zoning by-laws. While these are disruptive actions, they occurred outside the hearing room and I heard no evidence about them during the hearing. I conclude that I do not have enough evidence to make a finding that costs are warranted for this conduct.
K.B.’ evidence was shown to be incomplete, out of date and irrelevant
16K.B. based much of her evidence on information she or her husband gathered as a result of a freedom of information request made under the Freedom of Information and Protection of Privacy Act, R.S.O. 190, c. F.31. Using this information, she made allegations against Yongehurst and its owners on the issues of zoning, fire safety, building permits and miscellaneous other matters concerning the conduct and character of the two co-owners of Yongehurst.
17The allegations were determined to be unfounded or only partially correct. The issue is whether K.B.’s conduct in putting forward such allegations without the correct information to support them is unreasonable, frivolous, vexatious or evidence of bad faith. A secondary question is whether the delay in the hearing caused by K.B.’s calling this evidence is grounds for a cost award.
18I believe that K.B. demonstrated “confirmation bias” in her selection of the evidence she presented. That is, she selected those parts of the documents she had received which supported her contention that the character of the Yongehurst co-owners and their past conduct disentitled Yongehurst to a liquor licence. She ignored, overlooked or did not understand the exculpatory evidence contained within her documents. She also chose to overlook evidence in those documents which would, on any fair-minded reading, have raised questions about whether she understood the full sequence of events. It was not until Yongehurst mounted its defence during the hearing that it became apparent that the documents on which K.B. was relying were not the complete story.
19It would behoove K.B. to be more careful in future in making allegations about peoples’ character without strong supporting evidence. One result of her selective use of information was that Yongehurst and its co-owners were obliged to defend themselves against a range of allegations, which were either unfounded or only partly substantiated. However, I find that there is insufficient evidence of unreasonable, frivolous or vexatious conduct on K.B.’s part to support a claim for costs either on the basis of the incomplete evidence she submitted or on the basis of the time it took her to lead this evidence. The content and conduct of her case were within the range of evidence and behaviour that is accepted at the Tribunal.
Financial Hardship suffered by Yongehurst
20This proceeding took a year from the appeal to the conclusion of the hearing. During that time, Yongehurst was unable to proceed with its application for a liquor licence. I acknowledge that Yongehurst suffered lost financial opportunities as a result and incurred financial costs without offsetting revenue.
21Despite the regrettable financial hardship this has placed on the co-owners of Yongehurst, costs before the Tribunal are awarded on the basis of the conduct of the parties, not the financial consequences of the hearing itself on the appellant.
22In conclusion, while I sympathise with Yongehurst for the financial hardship it has incurred, I do not find the necessary grounds for a cost award.
ORDER
23This motion for costs is dismissed.
LICENCE APPEAL TRIBUNAL
Laurie Sanford, Vice Chair
Released: May 29, 2018