Yongehurst Distillery Corp. v. Registrar of Alcohol, Gaming and Racing, 2018 CanLII 50261

Licence Appeal Tribunal

Date: 2018/05/29

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. & K.B. Added Parties

AMENDED DECISION AND 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

Place and date of hearing: Toronto, Ontario November 21, 30, December 19, 2017 January 11, 12, 24, 26, 30, 2018 February 5, 15, 2018

REASONS FOR DECISION AND ORDER

OVERVIEW

1The appellant, Yongehurst Distillery Corp. (“Yongehurst”) manufacturers spirits and applied for a liquor licence for its premises and the adjoining patio. 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. This hearing is to review the application, consider the objections and to determine whether the granting of the licence is in the public interest, having regard to the needs and wishes of the municipality in which Yongehurst is located.

2The objectors to Yongehurst’s application were made parties to this proceeding. The added party K.B. objects to the licence being granted on the grounds that it is not in the public interest. The added party A.K. does not object to the licence being granted but wishes the licence to exclude the patio and to be subject to conditions about hours of operation and occupancy limits.

3For the reasons set out below, I find there are no persuasive reasons to deny the licence on the grounds of public interest. There is evidence, which I accept, that the granting of the liquor licence to Yongehurst is widely supported by the community in which it is located.

4It is reasonable to impose certain conditions on the hours of operation of the patio. Yongehurst consents to the imposition of these limits. It is also appropriate to prohibit the amplification of music or entertainment on the patio or the broadcast of music or entertainment onto the patio. I direct that these conditions be attached to the licence. It is also appropriate to limit the occupancy on the patio and this may be done either by the parties agreeing to amend the licence or by way of condition on the licence itself.

PRELIMINARY MATTERS

5As a preliminary matter, Yongehurst brought a motion for the following:

a. A dismissal of the matter without a hearing on the grounds that the added parties and their legal representatives were intentionally manipulating the proceedings to cause delay;

b. A ruling that no further disclosure be considered from the added parties on the grounds of lateness;

c. An opportunity for Yongehurst to calculate and claim the monetary losses incurred as a result of the tactics of the added parties, and

d. The recusal of Mr. Flett as counsel for the added party A.K. on several grounds, which are set out below.

6I dismissed the motion for the following reasons.

7By 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 added party K.B. were not in attendance at the motion.

8The hearing commenced on November 21, 2017. At the outset, A.K. renewed his motion to adjourn on the grounds that his counsel 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.

9The right of a party to a hearing is a fundamental one and the bar to dismiss a matter without a hearing is high. In this case, the adjournment order I made was on consent of all parties. There was no evidence before me that the added parties or their legal representatives were “intentionally manipulating the proceedings to cause delay.”

10In my November 22nd Order, I set new disclosure provisions. This revised disclosure order was designed to address the fact that all parties, including Yongehurst, had additional disclosure they wished to make. In light of this, it is not appropriate to single out the added parties for their failure to meet the original dates for disclosure or to reopen the disclosure provisions.

11The monetary damages that Yongehurst seeks are not within the jurisdiction of the Tribunal to grant. Therefore this part of the motion cannot be entertained.

12Yongehurst wishes the recusal of Mr. Flett for the following reasons. Yongehurst alleges that Mr. Flett misrepresented Yongehurst’s position on one or both of the adjournment motions by indicating that Yongehurst was not taking a position on the adjournment when in fact Yongehurst opposed both adjournment motions. Yongehurst alleges that Mr. Flett did not make himself available on date set for the start of the hearing, causing Yongehurst prejudice as it was ready to commence. Yongehurst submits they were misled into agreeing to an adjournment on the date set for the start of the hearing on the understanding that the parties would use the time to attempt a negotiated settlement of the issues between them. Yongehurst alleges that Mr. Flett then refused to permit negotiations between his client and Yongehurst to proceed in his absence.

13It is a fundamental principle of our legal system that a party is entitled to have legal representation. Once a party has retained a lawyer, this Tribunal is reluctant to interfere with this retainer in the absence of extraordinary circumstances. It is unfortunately not unusual for a lawyer, retained shortly before a hearing date, to be unavailable on that date. It is unfortunate in this case that neither the added parties nor Mr. Flett or his delegate attended the original motion to deal the adjournment request. However, Yongehurst’s agents were present at both adjournment motions and were able to represent Yongehurst’s position regarding the adjournment. Therefore, Yongehurst was able to clarify any misunderstanding of its position. There is no finding, in either decision on the adjournment motions, that Mr. Flett intentionally misrepresented Yongehurst’s position and there is no evidence before me of intentional misrepresentation.

14As noted above, Mr. Flett was not present at the date and time scheduled for the commencement of the hearing. However, he did send a representative to schedule new dates. I had understood that the parties were to enter into negotiations after I had granted the adjournment. However, when Mr. Flett’s delegate telephoned Mr. Flett, he was instructed not to proceed with settlement discussions. Parties are not obliged to enter into negotiations and the failure to do so is not a bar to being represented by the lawyer of one’s choosing. It is unfortunate that no one understood what Mr. Flett’s position on negotiations was before the adjournment was granted but this is not evidence of a deliberate attempt to prejudice Yongehurst. Yongehurst has not provided evidence of the sort of extraordinary circumstances which would be required to remove counsel from representing their client.

ISSUES AND ANALYSIS

15K.B. submits that it is not in the public interest to grant a liquor licence to Yongehurst for several reasons. First, she alleges that Mr. Sacco and Mr. Panacci have been in persistent violation of zoning by-laws, fire code regulations and building permit requirements for almost 18 months, and have endangered the neighbourhood through the illegal operation of hazardous distillery equipment, or “still”. Their irresponsible behaviour, in her submission, disentitles them to a licence. K.B. also alleges that Messrs, Sacco and Panacci have been neither transparent nor consistent about their plans for the business and the proposed licence. K.B. also asserts that the operation of a licenced establishment is not consistent with the character of the neighbourhood.

16A.K. does not object to the granting of a liquor licence to Yongehurst but he has requested that certain conditions be attached to the liquor licence.

17In deciding the issue of whether or not the licencing of Yongehurst is in the public interest, the question of whether zoning by-laws, fire safety requirements or building permits were complied with is not the question I must decide. The issue that K.B. raises is whether, by virtue of their past conduct regarding these regulatory requirements, Mr. Sacco and Panacci have disentitled themselves to a licence in the public interest.

18The issues I must decide in determining this appeal may be summarised as follows.

19Issue 1: Whether the licensing of Yongehurst is not in the public interest, having regard to the needs and wishes of the residents of the municipality in which Yongehurst is situated:

a. Whether the past conduct of Yongehurst’s owners disentitle it to a licence on the grounds of public interest, specifically whether there has been persistent violations of municipal regulatory requirements that call the responsibility of Yongehurst as a liquor licence holder into question. These regulatory requirements include:

i. zoning compliance;

ii. fire safety compliance;

iii. building code compliance, and

iv. other compliance issues.

b. Whether Yongehurst’s owners have lacked transparency or consistency regarding their plans to the point that they can be said to not be acting in the public interest;

c. Whether the operation of a licenced establishment is inconsistent with the character of the neighbourhood.

20Issue 2: whether Yongehurst’s liquor licence should be subject to conditions and, if so, what conditions are appropriate to balance the needs and interests of the added parties, of the neighbourhood and of Yongehurst.

21After considering these issues and for the reasons set out below, I find there are no persuasive evidence that granting a liquor licence to Yongehurst is not in the public interest, having regard to the needs and wishes of the residents of the municipality in which Yongehurst is situated. There is no persuasive evidence that Yongehurst or its co-owners have behaved irresponsibly in complying with regulatory requirements. There is no persuasive evidence that the past conduct of the Yongehurst owners disentitles Yongehurst to a liquor licence. The added parties have failed to demonstrate that the operation of Yongehurst would be inconsistent with the character of the neighbourhood. There is evidence, which I accept, that the granting of the liquor licence to Yongehurst is widely supported by the community in which it is located.

22For the reasons set out below, I find that it is appropriate to attach conditions to the Yongehurst’s liquor licence regarding the operation of its patio. These conditions will address hours of operation and the broadcasting of amplified music or entertainment onto the patio. Additionally, the capacity of the patio will be limited.

ISSUE 1 – IS THE LICENCING OF YONGEHURST IN THE PUBLIC INTEREST?

Issue 1 a – Does the past conduct of the Yongehurst owners disentitle them to a licence on the grounds of public interest?

Issue 1a i – has Yongehurst been irresponsible concerning zoning compliance?

23Three people testified about the zoning of the Yongehurst premises. L.B. testified on behalf of K.B. Mr. Sera, the landlord of Yongehurst, and Mr. Panacci, one of the co-owners of Yongehurst testified on behalf of the appellant.

24L.B. referred to information he had gathered as a result of a freedom of information request he had made under the Freedom of Information and Protection of Privacy Act, R.S.O. 190, c. F.31 as the basis for the allegations he made against Yongehurst on the issues of zoning, fire safety, building permits and the miscellaneous other allegations he made about the conduct and character of the two co-owners of Yongehurst.

25Concerning the zoning of the premises, L.B. pointed to reports and statements by various municipal officials asserting that the premises were improperly zoned.¹ L.B. alleged that the owners of Yongehurst “ignored that and ploughed ahead”. L.B. cited the alleged ongoing zoning infraction as evidence that Yongehurst operated in persistent violation of the law.

26Mr. Sera testified that, as the owner of the building in which Yongehurst operates, he received notice of a zoning by-law violation in November 2016. He approached the City of Toronto zoning authorities for clarification. He was advised that the inspector who issued the notice was in error and that the premises were appropriately zoned for the Yongehurst business.

27Mr. Panacci also testified about the zoning issue. His testimony was that when Mr. Sera received the notification of a zoning violation, he advised Yongehurst that its lease would be terminated if the zoning were improper. Mr. Panacci referred to an email thread in December 2016 between himself and Councillor Cesar Palacio, who represents the riding that includes Yongehurst.² Mr. Panacci asked Councillor Palacio for confirmation that the zoning for Yongehurst’s operation had been approved and Councillor Palacio confirmed that it had.

28I accept the explanation of Mr. Sera and the testimony of Mr. Panacci that the notice of zoning by-law violation was sent in error. It is not in Mr. Sera’s long term interest to permit a tenant to operate an improperly zoned business for over a year after being advised of the violation. Additionally, for the reasons noted below, I find him to be a credible witness. I find that Mr. Sera moved quickly to clarify the zoning matter. I find that Mr. Panacci did not “ignore” the zoning infraction and “plough on”. On the contrary, he wrote to his local councillor within a month seeking clarification that the matter had been resolved. There is no evidence that Mr. Panacci, a co-owner of Yongehurst, acted irresponsibly in connection with the zoning of the premises for use by Yongehurst.

Issue 1aii – has Yongehurst been irresponsible concerning fire safety requirements in way that affects the public interest?

29L.B. in his testimony, asserted that Yongehurst operated an illegal distillery operation in persistent violation of the Ontario Fire Code. According to L.B., this conduct put the neighbourhood at risk for a period of approximately a year and a half. L.B. is of the view that this demonstrates the irresponsibility of the Yongehurst co-owners and disentitles them to a liquor licence. L.B. referred to numerous documents including fire safety chronologies³ and Notices of Violation and an Inspection Order⁴ in support of his allegations about the fire safety violations. L.B. testified that Yongehurst currently runs an illegal business.

30Both Mr. Panacci and Mr. Sera testified on behalf of Yongehurst. Concerning the allegation of an illegal distillery, Mr. Panacci produced a letter from the Canada Revenue Agency issuing a spirits and excise warehouse licence as well as a provincial manufacturer’s licence and a provincial on-site distillery retail store authorisation.⁵ Ms. K, in submissions, confirmed that the question of whether Yongehurst has a federal licence to manufacture spirits is not in issue before me. The Alcohol and Gaming Commission (“AGCO”), on the strength of the federal licence, has issued a provincial retail licence. I accept this evidence and find that Yongehurst has not been operating an illegal distillery.

31Mr. Panacci testified that Yongehurst retained an engineer to design the steam boiler, pipes and pump of the distillery at the outset of its operation. However, Mr. Panacci did not produce either the engineer’s report or any certificate of safety for the heating units. Therefore, I draw no conclusions about the safety or otherwise of the distillery equipment based on the fact that the heating units were designed by an engineer.

32Mr. Panacci testified that Yongehurst contacted the Toronto Fire Services as part of its application for a liquor licence. Yongehurst has been served with three distinct Notices of Violation from the Toronto Fire Services, according to Mr. Panacci. The first Notice of Violation was served by the Toronto Fire Services on Yongehurst as a result of an inspection on February 9, 2017.⁶ It relates to two self-closing doors which were not functioning. According to Mr. Panacci, the violation was remedied. Mr. Sera corroborated this testimony. Mr. Sera testified that he was aware of this Notice of Violation and that, since he had the self-closing mechanisms in his inventory, he did the repairs. To his knowledge, this remedied the violation.

33The second Notice of Violation was issued on March 15, 2017, Mr. Panacci said.⁷ This second violation related to some missing fire extinguishers and a missing exit sign as well as repairs needed to the fire separation wall. Mr. Panacci’s testimony was that these deficiencies were repaired within the time allowed.

34According to a Fire Inspection Chronology, introduced by K.B.⁸, in March, 2017, the fire inspector assigned to Yongehurst contacted an engineer to assist in the inspection of the distillery equipment and site. The engineer inspected the premises and issued an Inspection Order on May 5, 2017.⁹ This Inspection Order raises serious concerns about the safety of the operation of the still. To address these concerns, Yongehurst was ordered to engage an engineer to assess the action required to bring the operation into compliance with the Ontario Building Code and the Ontario Fire Code. Yongehurst was given until July 7, 2017 to comply. However, due to an illness, the follow-up inspection was delayed until July 28, 2017. Mr. Panacci testified that Yongehurst could not afford the engineering services ordered by the Toronto Fire Services. Therefore, after some negotiation, Yongehurst proposed to dismantle the still until the engineer could be retained. Rendering the still inoperable was done sometime before the July 28th inspection. The Toronto Fire Services Inspector notes (Ex 31) that the still was dismantled and unusable at the time of the July 28th inspection. According to the Fire Safety Chronology, there were ongoing discussions between Yongehurst and Toronto Fire Services about how much product could be stored at the Yongehurst site, what repairs to a fire separation wall and what additional equipment would be required for Yongehurst to operate with a liquor licence. However, according to the testimony of Mr. Panacci, the dismantling of the still has addressed the immediate concerns of the Toronto fire safety authorities.

35Mr. Panacci testified that the concerns raised in the May, 2017 Inspection Order related to the reluctance of the fire department to take liability for the safety of the distillery equipment. This explanation does not accord with the reasons given in the Inspection Order itself or with the requirements of the Inspection Order.

36Mr. Panacci testified that all the fire safety violations had been addressed and that Yongehurst has never been fined or had other sanctions leveled against them. Yongehurst hopes to retain an engineer to address the issues surrounding the operation of the still and resume distilling. In the meantime, Mr. Panacci testified, Yongehurst is able to use its existing inventory of spirits to continue manufacturing, blending and infusing its products. Mr. Sera testified that he was aware of the fire safety violations and, to his knowledge, they had all been addressed. His testimony was that he did not allow Yongehurst to distill once the Toronto Fire Services “had identified it as an issue”.

37I find that Mr. Panacci has understated the concerns of the Toronto Fire Services about the operations of the distillery. There are concerns going beyond liability that will need to be addressed. However, there is no persuasive evidence that Yongehurst or its co-owners conducted themselves in an irresponsible way in relation to meeting the requirements of Toronto Fire Services. It appears that the fire safety inspector assigned to Yongehurst was unaware of the fire safety requirements involved in operating a still. Therefore the Toronto Fire Services sought the assistance of an engineer who inspected the premises and, in May, 2017, produced a report outlining the concerns the fire safety authorities have about the operation of the still and the actions required to bring Yongehurst into compliance. Yongehurst has brought itself into compliance by dismantling the still and ceasing distillery operations until it can retain an engineer. This compliance was achieved prior to the follow-up inspection of the Toronto Fire Safety authorities. There is no evidence that the Toronto Fire Safety authorities have ever sanctioned Yongehurst for non-compliance with its requirements.

Issue 1aiii – has Yongehurst been irresponsible concerning building permit requirements in a way that affects the public interest?

38L.B. alleges that Yongehurst has been persistently undertaking construction without a building permit. As evidence, L.B. cites the Fire Inspection Chronologies¹⁰ he obtained in his freedom of information request. Mr. Panacci testified that Yongehurst approached the City of Toronto to learn if it would need a building permit for the work it wanted to do on site and was advised that a building permit would not be required.

39I have reviewed the exhibits that L.B. referred to in his testimony. There are repeated references to a lack of a building permit for repairs of the fire separation walls and for the construction of the still. However, the concerns appear to relate to having the building inspectors’ opinions as to the fire safety of the construction and proposed repairs rather than an allegation of current violation. If there were a violation of the building permit requirements, one would expect to see a report by the Toronto Fire Services to the appropriate Toronto building department. There is no evidence of such a report or of any sanction for construction without a building permit. I find that this allegation is unfounded.

Issue 1aiv – has Yongehurst been irresponsible in other areas in a way that affects the public interest?

40L.B. made a series of miscellaneous allegations against the co-owners of Yongehurst. For example, he alleges that a responsible business operator would do their “due diligence” and bring themselves into compliance with the various municipal regulatory requirements without having to have Notices of Violation issued. L.B. produced no evidence to support this allegation. Sergeant Heather Thompson, an AGCO inspector who testified on behalf of the Registrar said that knowledge of the zoning by-laws or the Fire Code is not a requirement for liquor licensees.

41L.B. also alleged that it was up to Yongehurst to prove that they were in compliance with the municipal regulations at this hearing. While it is certainly the obligation of Yongehurst to satisfy the Registrar that it is in compliance with zoning, building and fire requirements, it is not the purpose of this hearing to decide compliance issues. Rather, it is the obligation of the objectors to demonstrate, on a balance of probabilities, that their objections are well founded. As regards the past conduct of Yongehurst and its co-founders, Sergeant Thompson testified that the Registrar has found nothing in the past conduct of either Yongehurst co-founder that would disentitle the company to a liquor licence. I find that K.B.’s allegations about the past conduct of Mr. Sacco and Mr. Panacci are unfounded.

Issue 1b – have the Yongehurst owners lacked transparency or consistency regarding their plans to the point that they can be said to not be acting in the public interest

42L.B. testified that Yongehurst has not been open or transparent about its plans. In support of this allegation, L.B. referred to a number of internal communications within the Toronto Fire Services that allude to various proposed business plans by Yongehurst.¹¹ Mr. Panachi testified that the plans of Yongehurst have not changed. His testimony is that the company is a manufacturer of spirits. Yongehurst wishes to promote its product through a combination of group tours, educational events, tastings and possible community events. The purpose of obtaining a liquor licence is to assist in this goal by serving patrons drinks which include Yongehurst’s products. Mr. Sera, Yongehurst’s landlord, confirmed that to his knowledge, Yongehurst’s plans are unchanged. In terms of openness or transparency, there is evidence¹² that Yongehurst contacted the residents of the street on which K.B. and L.B. live by letter and on its website to explain their plans. L.B.’s testimony was that this was insufficient. In L.B.’s opinion, the Yongehurst co-founders have the obligation to reach out to him personally. L.B. said that, because of this opinion, neither he nor K.B. attempted to contact Yongehurst to discuss any of their concerns.

43I accept the testimony of Mr. Sera, Yongehurst’s landlord that Yongehurst’s plans have not changed. As noted below, I found him a credible witness. Additionally, he has taken an interest in the business operations of his tenants and may be expected to know when substantive changes in a business plan are made. I find that the level of communication initiated by Yongehurst to the neighbourhood does not raise concerns about whether the licencing of Yongehurst is in the public interest. It is in the long term best interest of the neighbourhood to have neighbouring businesses and residents in communication about issues between them. There is no protocol about whose obligation it is to initiate this communication. One consequence of K.B.’s decision not to engage with Yongehurst is that it left her and her husband with only the documents gathered during their freedom of information request on which to base their objections about past conduct. Their choice not to ask either the co-owners of Yongehurst or Yongehurst’s landlord about their concerns has meant a missed opportunity to begin communications between neighbours and a prolonged hearing with allegations based on incomplete information.

Issue 1c – Is the licensing of Yongehurst inconsistent with the character of the neighbourhood?

44Subsection 6(2)(h) of the Liquor Licence Act, R.S.O. 1990, c.L 19 (the “Act”) provides that an applicant is entitled to a liquor licence if it otherwise meets the qualifications and except if “the licence is not in the public interest having regard to the needs and wishes of the residents of the municipality in which the premises are located.” The Tribunal has consistently interpreted this provision as requiring a balancing of the interests of all of the community residents, including those who support and oppose the licence application, as well as those of, in this case, Yongehurst. Those neighbours in closest proximity to the proposed licensee may have concerns that merit close consideration as they may be expected to be most impacted by the issuance of a liquor licence. One concern raised by K.B. in this case is whether the operation of Yongehurst as a licensed establishment is consistent with the character of the neighbourhood.

45A map of the neighbourhood was introduced and is not disputed.¹³ The map shows a building which houses Yongehurst. The building sits at the corner of Geary Avenue (“Geary”), which runs east/west and Wesmorland Avenue North (“Westmorland”), which runs north/south. Westmorland is a comparatively short street. It ends to the south at Geary and to the north at Davenport Road. Geary Street is largely commercial while Westmorland is largely residential.

46Seven people gave evidence about the character of the neighbourhood. L.B. testified as did A.K., an added party, his partner and a neighbour, P.D., who testified on behalf of A.K.. Mr. Sera, the landlord of Yongehurst, and Mr. Panacci testified on behalf of Yongehurst as did C.M., a local resident who works in urban planning and spends a fair amount of time biking and walking in the neighbourhood.

47L.B., A.K., his partner and Mr. P.D. all testified that Westmorland is a primarily residential street. According to these four witnesses, there is a mix of retired people, younger people and families on the street. At the corner of Geary and Westmorland there is the building in which Yongehurst is located and there is a parking lot across from that on the opposite corner. Apart from that, Westmorland is residential. Geary, on the other hand, is a mixed use street with commercial and some residential.

48P.D. has lived on Westmorland for 15 years and his house is across the street from Yongehurst. In the past, P.D. testified, there was noise from the building in which Yongehurst is situated, particularly when there were musicians in the building and when there was a wood working operation. It is quieter now, in his testimony.

49L.B., who has been in his house across from Yongehurst since 2013, testified that the neighbourhood was quiet. He testified that there had been a murder in the building where Yongehurst is located in 2004, when a licensed establishment operated in the building. He is concerned that there will be more violence if another liquor licence is granted.

50Mr. Sera, Yongehurst’s landlord, also gave evidence about the character of the neighbourhood. In 2004, shortly after the murder to which L.B. referred, Mr. Sera bought the 81,000 square foot building that sits at 116 Geary. While the building fronts on Geary, there are entrances opening onto Westmorland. Mr. Sera has named the building “The Artisan Factory”. The Artisan Factory sits directly beside A.K.’s home and houses about 40 businesses, which together employ about 200 full and part-time employees. One of these businesses is Yongehurst, which faces Westmorland. Mr. Sera characterised the neighbourhood, including Westmorland, in the early days of his ownership as “dangerous”. He was afraid to stay in the building after 5:00 pm. The tenants of the building were what Mr. Sera considered poor quality tenants, being primarily automobile shops. There were also musicians’ rehearsal studios, which kept irregular hours.

51Mr. Sera began a prolonged process of replacing the initial tenants with ones he felt were more in keeping with the evolving character of the neighbourhood. In 2012, he testified, he reached a turning point and began engaging with the community. Mr. Sera cited an example of wanting to have a coffee shop to serve the community. The unit he had in mind was vacant for about a year before he could find the tenant he felt reflected his vision for the Artisan Factory. The coffee shop there now functions as a bakery as well as a coffee house. In Mr. Sera’s opinion, it also acts as a community meeting place. By the same token, the pasta shop in his building makes its own pasta as well as selling meals. Mr. Sera testified that these and his other tenants operated businesses he felt were consistent with the emerging artisan and craft character of the neighbourhood. He has in the past refused to rent to chain operators.

52Mr. Sera had previously had a craft brewery as a tenant. The brewery made and sold its own beer. The business outgrew the premises and now operates about 5 minutes’ walk away. Mr. Sera testified that when Yongehurst approached him to lease it space to manufacture and sell its own spirits, he felt this was consistent with his vision for the building. He understands that while Yongehurst may offer samples of its products now, it requires a liquor licence to fully promote its products, including offering mixed drinks. However, Mr. Sera testified that he was not interested in having a traditional bar in the Artisan Factory. He testified that he would move against Yongehurst if they began to operate such a facility. His understanding is that Yongehurst intends to promote its products by offering tours, educational sessions, and by hosting special events while offering its products for sale in the bottle or by the glass. He is renting to Yongehurst because he thinks its operation will add cachet to the building. Mr. Sera testified that the character of the neighbourhood now is “wonderful”.

53C.M. testified that he frequently walks and rides his bike along Geary. He is involved in urban planning as part of his job but is not himself an urban planner. C.M. lives in the neighbourhood. His testimony is that the area is changing. There is, he said, a rollover to new young professionals and their families. He is seeing the older automobile body shops closing down and what he describes as “an interesting mix of business and industrial” coming in, particularly to Geary. He describes the business community as generating excitement. Geary is more vibrant and is becoming a destination, in his testimony. He testified that he has dropped into Yongehurst to purchase a bottle of their gin as a gift.

54C.M. testified about a growing sense of community which he believes is manifested in an annual, volunteer-organized, pumpkin parade, with an audience of 60 to 100 who are mostly children. Mr. Panacci cited the pumpkin parade as an example of the sort of community event that Yongehurst might choose to host to promote its products and to introduce itself to the community.

55I found both Mr. Sera and C.M. to be credible witnesses. Mr. Sera has an arm’s length relationship with Yongehurst. He supports Yongehurst’s application but has made it clear that if Yongehurst is either operating illegally or contravenes Mr. Sera’s vision for the Artisan Factory by, for example, operating a traditional bar, Mr. Sera will act against Yongehurst. Mr. Sera is proud of his role in the changing character of the neighbourhood. He gave his evidence in a forthright manner and was answered questions against his self-interest openly during cross-examination. Likewise, C.M. is at arm’s length to Yongehurst. He was able to offer concrete examples of the types of changes he was seeing, particularly on Geary.

56I find that the neighbourhood that includes the Artisan Factory is evolving into a craft and artisanal commercial area with residential buildings on both Geary and the surrounding streets, including Westmorland. I am not persuaded that the operation of Yongehurst is inconsistent with the character of the community in which it is located.

57L.B. testified that the licensing of Yongehurst was not in the public interest for the reasons stated above. P.D., while testifying on behalf of A.K., who does not object to the issuance of the licence, said that he would prefer that the licence not be granted. K.B. alluded to a third person who was unable to testify but who also objected to the granting of the liquor licence.

58Mr. Pannacci introduced approximately 175 memos by people expressing “strong support” for the granting of a liquor licence to Yongehurst. Some of the signatories are not from the immediate neighbourhood but some were from Westmorland and the immediately adjacent streets. L.B.’s testimony was that these people were misinformed about the true nature of Yongehurst’s past and the planned future of the licenced establishment. There is no evidence for this assertion.

Conclusion on Issue 1 – whether the licensing of Yongehurst is not in the public interest.

59Although “public interest” is not measured by the number of supporters or opponents, I find that Yongehurst does have a wide measure of support. K.B. is the only added party who opposes the granting of the licence as a matter of public interest. There is no persuasive evidence that granting Yongehurst a liquor licence would not be in the public interest.

Issue 2 – Should the liquor licence of Yongehurst be subject to conditions?

60Under subsection 23(12) of the Act, the Tribunal may attach to a licence “any condition that the Tribunal considers proper to give effect to the purposes of this Act”. The issue here is whether the Tribunal ought to attach conditions to the licence of Yongehurst and, if so, what should those conditions be.

61A.K. wants conditions attached to the liquor licence of Yongehurst. He moved into the house abutting Yongehurst’s business premises in 2013, when Yongehurst was already there. He and his partner are concerned about their privacy. A.K. testified that he already feels that he cannot sit on his front porch as a result of an altercation he had with the spouse of one of Yongehurst’s owners. He acknowledges that Yongehurst only operates on Fridays and Saturdays at present but he testified that the owners sometimes come to the business at other times, preventing him from comfortably sitting outside. A.K. also testified to feeling uncomfortable on one occasion when he went from his car to his house while being watched by one or more people at Yongehurst. He did not approach them or attempt a conversation with them.

62A.K. feels he will be unable to use his front yard if Yongehurst’s liquor licence is granted without conditions. A.K. is also concerned about noise, especially into the night as a result of the licensing of the patio. The conditions that A.K. is proposing of the operation of Yongehurst’s business are as follows:

a. No sale or service of liquor under the liquor licence on Sunday. Yongehurst would be permitted to sell their liquor in bottles under their current retail licence;

b. No liquor licence for the patio;

c. Sales and service to end by 6:00 pm on Monday to Wednesday and 9:00 pm on Thursday to Saturday, and

d. Capacity restricted to a maximum of 26 people.

63K.B. takes the position that no conditions will suffice to address her concerns. P.D. also expressed doubt about the conditions proposed by A.K.. His concern is both privacy and noise. P.D. is concerned that he will not be able to use his front or back yards, although he acknowledges that he cannot see the Yongehurst premises from his back yard. Mr. P.D. testified that he works from home and that his office is in front of his house, facing Yongehurst. He likes to keep his window open and, as noted above, has been bothered by noise from other, earlier tenants.

64Mr. Panacci testified that A.K.’s proposed conditions would not permit Yongehurst to survive. Yongehurst’s products have a higher than average price point, in Mr. Panacci’s testimony, and active promotion of the brand is how the company plans to overcome this and other obstacles. In addition to tours, educational sessions and tastings, Mr. Panacci testified, Yongehurst is planning to promote its products to the staff of other licenced establishments in the early week when bar business is generally slow. It would be necessary for Yongehurst to be able to serve in the evenings when the bar and restaurant staff are able to come to Yongehurst. Generally, Yongehurst expects to do most of its business after normal work hours, according to Mr. Panacci. Yongehurst has not considered whether it would host weddings but is open to the idea.

65Mr. Panacci in closing submissions submitted that, while Yongehurst wants an unconditional licence, it is willing to consent to some conditions. These are:

a. A capacity limit of 65 patrons inside the Yongehurst premises;

b. A capacity limit of 18 patrons on the patio, and

c. A limit of the hours of liquor sales and service to 11:00 p.m., with the right to apply for special occasion exemptions.

66Concerning conditions as to capacity and hours of operation for the interior of the Yongehurst premises, it is relevant that none of the witnesses for the added parties were aware that Yongehurst currently sells drinks by the glass. Yongehurst is currently restricted to selling only its spirits, not mixed drinks and it is restricted to cost recovery charges. Therefore, it is reasonable to conclude that the current sale and service of alcohol is not causing any issue with either of the added parties. It is the prospective sale of alcohol that concerns them. But this concern is speculative. In the absence of any persuasive evidence that the sale or service of alcohol within the Yongehurst premises will interfere with current levels of privacy and quiet of the neighbourhood, there is no persuasive reason to impose conditions on the liquor licence for the interior premises of Yongehurst.

67The proposed patio raises two issues. First, should the Yongehurst liquor licence extend to the patio and second, should there be restrictions on capacity, hours of service and noise levels. Considering first A.K.’s proposal that the patio not be licensed, C.M. testified that the only two patios in the immediate neighbourhood are at the coffee house that is located in the Artisan Factory facing Geary and at the craft brewery about 5 minutes’ walk from Yongehurst on Geary. Mr. Panacci confirmed this but also testified that there is a small seating area in front of the pasta shop that fronts on Geary. In C.M.’s experience, patios operate as a congregating point for a neighbourhood and may increase safety by providing more eyes on the street. C.M. testified that he believes that the neighbourhood would benefit from an additional patio.

68Mr. Panacci testified that presently, the craft brewery’s hours, including its patio hours, end at 9:00 p.m. on weekdays with the bottle shop retail operation remaining open until 11:00 p.m. on Fridays and Saturdays. Mr. Panacci testified that the brewery is in the process of applying to extend its service hours and this application has not been opposed. Mr. Panacci also introduced a text message from a neighbour across the street from Yongehurst, specifically supporting the patio.¹⁴

69There was some concern raised about an increase in traffic flow. No evidence was introduced about automotive traffic. The issue appears to relate to foot traffic. Mr. Panacci testified that he expects most of his customers to enter from Geary Street. This is a reasonable expectation given that Geary is primarily commercial and foot traffic might be expected to be heavier on that side of the Artisan Factory. If the patio is licensed, there may be an increase in foot traffic to and from the patio. However, given that Yongehurst is located at the north east end of the Artisan Factory and Geary adjoins the building to the south, it is reasonable to expect that most patrons will leave the patio and walk south to Geary rather than north around the block. There is no evidence of materially increased foot traffic to the north of Yongehurst.

70A.K. is very sensitive to issues of privacy. Yet he chose to purchase a home directly beside an 81,000 square foot building zoned for industrial use, with a distillery as his next door neighbour. He has not established that a patio is not in the public interest. Nor has he established that the licensing of a patio will interfere with the privacy and noise levels of the neighbourhood as a whole. The concerns that he and his neighbour P.D. expressed about privacy and quiet may be addressed by imposing conditions on the operation of the patio, as discussed below, but should not operate to prohibit any sale or service of alcohol on the patio.

71The second issue about the patio is whether there ought to be any conditions placed on its operation. There is no other business on Westmorland operating a patio and the proposed location of the Yongehurst patio directly abuts the property of A.K. and is across the street from P.D. It is reasonable to impose some restrictions on the sales and service of alcohol on the patio. It is relevant to note that Mr. Panacci believes that most of the business of Yongehurst will occur after normal working hours. This would appear to address much of P.D.’s concern about noise while he is working.

72Yongehurst proposed, in closing submissions to limit the patrons on the patio to 18. This appears reasonable. There should also be allowance for a reasonable number of staff and security personnel. I conclude that the capacity of the patio should be restricted to no more than 21 people. The Registrar submits that it is not appropriate to impose a capacity limit as a condition of the license. One reason given is that such a limit is not consistent with the Registrar’s primary mandate to ensure that alcohol is consumed safely. Another reason given is that a condition limiting capacity cannot be varied if, for example, a licensee wants to apply for an exception to the capacity limit for a special event. The Registrar did acknowledge that where appropriate, the applicant may amend its liquor licence application to lower the capacity applied for. However, this approach raises the question of whether or not the Tribunal has the jurisdiction to direct an applicant to amend its liquor licence application.

73The Tribunal wishes to limit the capacity on the patio to no more than 21 people. The question is how best to accomplish this. The Tribunal is mindful of the Registrar’s concerns about not imposing capacity limits as a condition of the licence. However, the Tribunal should not limit its responsibility to set conditions that are proper to give effect to the Act. In this case, I conclude that capacity limitations on the patio are appropriate to balance the needs and wishes of Yongehurst, its immediate neighbours and the wider community.

74One way to address the question of capacity is for me to direct that the capacity on the patio be no greater than 21 and leave the Registrar and Yongehurst to determine the best way to achieve that. I would expect that Yongehurst would amend its application to seek a capacity of 21 people on the patio. If the parties are unable to reach an agreement to limit the capacity, then I will direct the Registrar to impose the limit as a condition of the licence.

75Yongehurst also proposed that sales and service on the patio end by 11:00 pm. This seems reasonable. There was evidence given about the closing hours of various licenced establishments in the area. The closest analogous licensed establishment is the nearby craft brewery that is currently serves alcohol until 9:00 pm but is applying for extended hours without opposition, according to Mr. Panacci.

76Finally, it is appropriate to keep amplified music or entertainment off the patio given its proximity to the neighbours. I will therefore direct that no amplified music or entertainment be played on the patio or broadcast onto the patio.

ORDER

77The Tribunal directs the Registrar to approve the application for a liquor licence made by Yongehurst Distillery Corp. for both the indoors and adjoining patio at its premises at 116 Geary Avenue, Toronto, subject to the filing of all usual and required municipal clearance letters and application requirements, and subject to the following conditions which will attach to the licence.

a. The sale and service of alcohol on the patio shall end at 11:00 p.m.

b. No amplified music or entertainment shall be played on the patio or be broadcast onto the patio.

78The capacity on the adjoining patio will be no more than 21 people. The parties may agree as to how to implement this capacity limitation. In the absence of an agreement, the Tribunal directs the Registrar to attach the capacity limit as a condition of the licence.

Footnotes

1. 1Exhibit 9, p. 242; Exhibit 10, p. 17; Exhibit 13, p. 27
2. 2Exhibit 39, first page
3. 3For example, Exhibits 6 & 27
4. 4Exhibits 12, 16 & 19
5. 5Exhibit 47
6. 6Exhibit 12
7. 7Exhibit 16
8. 8Exhibit 6
9. 9Exhibit 19A
10. 10For example, Exhibits 6 & 27
11. 11For example, in the fire inspection chronologies, Exhibits 6 & 27.
12. 12Exhibits 4 & 5
13. 13Exhibit 54
14. 14Exhibit 51