Date: 2018-03-06

Appeal from a Notice of Proposed Order from the Registrar of Alcohol, Gaming and Racing under the Gaming Control Act, 1992, S.O. 1992, c. 24 - to Refuse Registration

Between:

2421185 Ontario Inc. o/a Shaw’s A/1 Bakery & Flowers

Appellant

-and-

Registrar of Alcohol, Gaming and Racing

Respondent

DECISION AND ORDER

Adjudicator: Mary Ann Spencer, Member

Appearances:

For the Appellant: Sevag Yeghoyan, Counsel

For the Respondent: Aviva Harari, Counsel

Place and dates of hearing: Toronto, Ontario

October 19, November 21, 2017

February 12, 2018

REASONS FOR DECISION AND ORDER

A. Overview

1This is a hearing before the Licence Appeal Tribunal of an appeal by 2421185 Ontario Inc. o/a Shaw’s A/1 Bakery & Flowers of a Notice of Proposed Order to refuse registration issued by the Deputy Registrar of Alcohol, Gaming and Racing on February 13, 2017.

2Sophia Peerzada is the sole officer and director of Shaw’s which was incorporated on June 2, 2014. On June 30, 2014, Shaw’s purchased All-in-One Produce and Flowers which operated at the same location. Nadia Peerzada, Sophia Peerzada’s mother, was the sole officer and director of All-in-One. Shah Peerzada, Sophia Peerzada’s father, was its manager.

3On November 13, 2015, Sophia Peerzada submitted an application for registration of Shaw’s as a supplier to the Alcohol and Gaming Commission of Ontario (“AGCO”).

4The Deputy Registrar proposes to refuse Shaw’s registration on the basis that there are reasonable grounds to believe that it will not act as a supplier in accordance with law, with honesty, integrity or in the public interest. The Registrar’s concern is with the involvement of Nadia and Shah Peerzada in Shaw’s business.

5On April 6, 2016, the AGCO proposed Terms of Registration to Sophia Peerzada which set out that her parents and her brother would have no involvement in the management, conduct, sale and redemption of OLG lottery products and were not permitted to be on Shaw’s premises during business hours. Sophia Peerzada did not agree to these terms.

6Sophia Peerzada’s position is that she requires the assistance of her family to operate her business and she will put measures in place to ensure that her family members do not operate the lottery terminal or sell break open lottery tickets.

7For the reasons set out below, I confirm the Deputy Registrar’s Notice of Proposed Order to refuse registration of the appellant.

B. ISSUES

8The past conduct of Sophia Peerzada, the officer and director of the appellant, is not at issue in this appeal. The concerns of the Deputy Registrar are with the past conduct of her parents, Nadia and Shah Peerzada, their potential influence over Sophia Peerzada, and therefore their involvement in the appellant’s business.

9The issue to be considered is:

(a) whether the past conduct of persons interested in the officer and director of the appellant provides reasonable grounds to believe that the appellant will not act in accordance with law, or with integrity, honesty and in the public interest.

10To decide this issue, I must first determine whether Nadia and Shah Peerzada are “persons interested” as set out in section 8 of the Act. I must also make a finding with respect to their past conduct. The Registrar proposed to refuse the application of All-in-One as a supplier under the Act based on the past conduct of its officer and director, Nadia Peerzada. The Registrar also proposed to refuse the application of Shah Peerzada as a retail lottery manager based on his past conduct. Neither Notice of Proposed Order was appealed and no findings have been made with respect to the Registrar’s allegations.

11If I find that Nadia and Shah Peerzada are “persons interested” and that their past conduct provides reason to believe that the appellant will not act in accordance with law, or with integrity, honesty and in the public interest, I must determine the appropriate action for the Registrar to take.

C. LAW

12Section 10(b)(ii) of the Gaming Control Act provides that an application for registration as a supplier may be refused if the Registrar has reasonable grounds to believe, with regard to the past conduct of a person interested in the officers and directors of the corporate applicant, that the applicant will not act in accordance with law, or with integrity, honesty or in the public interest.

13Section 8 of the Act sets out the interpretation of “person interested”. A person is deemed to be interested in another person if in the Registrar’s opinion, based on reasonable grounds, a person has a beneficial interest in the other person’s business; if the person exercises or may exercise control, either directly or indirectly over the other person’s business; or, if the person may have provided financing, either directly or indirectly to the other person’s business.

14Section 13(8) of the Act provides that the Tribunal may confirm or set aside the proposed order of the Registrar and direct the Registrar to take the action the Tribunal considers the Registrar ought to take. As set out in section 13(9), the Tribunal may substitute its opinion for that of the Registrar. Section 13(10) permits the Tribunal to attach terms to its order as it considers appropriate.

D. EVIDENCE

Shaw’s A/1 Bakery & Flowers

15Sophia Peerzada is the sole director and officer of Shaw’s. Ms. Peerzada testified that she incorporated Shaw’s in June 2014. She took over her mother’s existing business, All-in-One, toward the end of 2013 or in early 2014. At that time another business in the plaza, where All-in-One was located, was closing down and there was an opportunity to purchase its equipment and open a dairy bar. Ms. Peerzada saw this as an opportunity to run her own business. She testified that she wanted to purchase the business because “everything was already there” and her parents would be there to help her.

16Sophia Peerzada paid $77,000 to Nadia Peerzada for the business. She testified that she withdrew approximately 50% of the purchase price from her savings. She has paid the balance from Shaw’s revenue.

17Ms. Peerzada testified that Shaw’s is not a typical variety store. While it sells groceries and cigarettes, it has other distinct areas. There is a counter at the front of the store where the cash is located. A dairy bar, which serves ice cream and milk shakes made-to-order, and a bakery are located at the back of the premises. The baking is done on site by Nadia Peerzada. Sophia Peerzada estimated that the dairy and bakery areas are at least 25 feet from the front cash area where the lottery terminal would be located. The store also has coolers, one of which is for the fresh flowers it sells. In the summer, Shaw’s also operates a garden centre from a separate location across the street. The garden centre is run by Ms. Peerzada’s father and her fiancé and has a separate cash register.

18Ms. Peerzada stated that the ability to sell lottery products would enhance her business. While she agreed that the business is still able to operate, it has lost customers since All-in-One lost its lottery terminal. Ms. Peerzada is not sure of the reasons All-in-One lost its registration.

Shaw’s Application for Registration

19Frank Cuda has been the manager of Gaming Eligibility at the AGCO since 1999. One of Mr. Cuda’s responsibilities is the review of applications for registration under the Act. Mr. Cuda testified about the chronology of the appellant’s application and the reasons for the Registrar’s concerns.

20Mr. Cuda testified that the Act requires that both the retailer and the individuals with managerial or supervisory responsibilities must be registered. All registrants must conduct themselves with honesty and integrity. The Registrar’s concerns are not with the past conduct of Sophia Peerzada but with that of her parents, Nadia and Shah Peerzada.

21Mr. Cuda explained that the hours of operation of a lottery terminal are set by the OLG. The Registrar’s concerns are that Nadia and Shah Peerzada would have access to the terminal if they were on the appellant’s premises during those hours of operation. Mr. Cuda does not believe that it would be possible to prevent the Peerzadas from accessing the area where the terminal would be located or that fully operational video cameras would address this concern.

22On November 13, 2013, the Deputy Registrar issued a Notice of Proposed Order to refuse registration to All-in-One which had failed to renew its registration in time and therefore had re-applied. Nadia Peerzada was its sole officer and director.

23Mr. Cuda explained that the OLG had conducted an investigation at All-in-One after the OLG system flagged unusual patterns of sports wagering sales. A record is triggered in the OLG’s systems when $500 of sports wagering sales is recorded. All-in-One had triggered the OLG system 85 times. As a result of the investigation’s findings, the AGCO issued the Notice of Proposed Order to refuse registration. On April 16, 2014, a Notice of Further or Other Particulars was issued because the applicant had been charged with various offences under the Criminal Code relating to the possession and sale of counterfeit DVDs. The Notice of Proposed Order to refuse registration was not appealed and the Final Order was issued on April 14, 2014.

24Mr. Cuda testified that the AGCO received Shaw’s application for registration as a seller on November 13, 2015. This indicated Shaw’s was operating at the same location as former registrant All-in-One. The application also indicated that Shaw’s did not employ anyone who would be involved in the sale of OLG products. Sophia Peerzada submitted a Personal Disclosure Form and signed the OLG Retailer Agreement which must be completed by applicants seeking registration as a retailer.

25In February 2016, AGCO staff member A.D. wrote to Sophia Peerzada and asked for an explanation of the role Nadia Peerzada would play in the appellant’s business. A.D. requested a copy of the agreement for Shaw’s purchase of All-in-One. She also asked Ms. Peerzada to explain who would manage the store when Ms. Peerzada, who had indicated she was still attending college, was not present. On February 18, 2016, Ms. Peerzada responded and stated Nadia Peerzada would work in the store’s bakery section and Shah Peerzada would work in the balance of the store. She requested a registration application to enable him to operate the lottery terminal.

26Mr. Cuda testified that the AGCO received a copy of the Agreement of Purchase and Sale which indicates the purchase, for $77,527, was dated June 30, 2014. However, he highlighted that the agreement was not signed by Sophia and Nadia Peerzada until January 11, 2016.

27Mr. Cuda further testified that on March 4, 2016, the AGCO received Shah Peerzada’s Personal Disclosure form as part of his application for registration as a manager. Mr. Peerzada identified himself as the manager of Shaw’s. The Deputy Registrar issued a Notice of Proposed Order to refuse registration on February 13, 2017. The Notice alleged that Mr. Peerzada had failed to disclose two convictions under the Criminal Code, had filed for bankruptcy in 2013, and had counselled a witness to lie to OLG investigators. It further alleged that counterfeit DVDs had been found on All-in-One’s premises in February, 2014 when Mr. Peerzada was its manager. The Notice of Proposed Order was not appealed and the Deputy Registrar issued a Final Order on March 17, 2017.

28On April 6, 2016, Ms. Dankan advised Sophia Peerzada that the Deputy Registrar was prepared to approve Shaw’s application for registration subject to terms. Those terms included that Sophia Peerzada’s parents would have no involvement in the sale or redemption of OLG products and would not be permitted to be on the premises during Shaw’s business hours. Mr. Cuda explained that the latter term was to enable Nadia Peerzada to be on the premises outside of business hours to prepare items for sale in the bakery.

29On April 25, 2016, Sophia Peerzada wrote A.D. and asked for reconsideration of the Registrar’s decision. Ms. Peerzada wrote that she could not manage the business without her parents and indicated she would monitor the counter area with recorded security cameras to ensure they did not access the lottery terminal. Mr. Cuda testified that the AGCO did not consider modification of the terms.

30On May 18, 2016, Sophia Peerzada asked the AGCO to reconsider its decision and allow her mother, father, brothers and an employee to work at the business. She indicated she and her father would be primarily responsible for managing the lottery terminal. On May 30, 2016, she sent a schedule to indicate when she herself would be at the store. On August 26, 2016, she advised A.D. that she had completed her studies and was now working full-time at the store.

The Appellant’s Plans

31Referring to a sketch of Shaw’s premises, which indicates that the cash counter is located to the left side of its front entrance, Sophia Peerzada testified that she would be able to address the Registrar’s concerns about her parents’ access to the lottery terminal by segregating this area. She has renovated the area by installing a new higher counter and by moving shelving to the front of it. If the registration is granted, she will add a door, approximately four feet high with a lock rather than a latch, to prevent access to the area behind the counter.

32Ms. Peerzada testified that her parents would not be allowed any access to the area behind the front counter. A second cash will be added to the bakery area. While her father currently does operate the cash register, only she and her fiancé will sell lottery tickets and operate the front cash register if Shaw’s is registered. Her fiancé is currently a student and works part time elsewhere three days a week. Otherwise, he helps out in the store. She will hire someone else to cover during the times she and her fiancé are not present.

33Ms. Peerzada further testified that the lottery terminal has a password which her parents would not be given. To ensure her parents do not enter the front counter area when she is not present, she has security cameras. She will connect them to an application which will allow her to access the camera feeds when she is off site. The store has a back entrance and her parents would only enter the store that way. She indicated that she would accept any further reasonable restrictions.

34Ms. Peerzada further testified that her parents have other interests and are not always at the store. Her father owns a plaza. Her mother helps her father with this and also runs a not-for-profit organization which she operates from home. Ms. Peerzada estimated that her father spends two or three days a week away from the store and her mother spends three days a week on her other interests. Her parents do not have regular hours at the store. Ms. Peerzada stated that they can come in whenever they wish to.

35Asked what her responsibilities are, Ms. Peerzada stated that she operates the cash, does ordering, does e-mail and cleans the store. She does not prepare payroll which is done by an accountant. Both of her parents are paid a salary. There is no lease for the store. The monthly rent cheques are drawn from the store accounts but her parents pay the landlord who personally collects the cheque each month. Her parents have a long standing relationship with the landlord and socialize with him when he collects the cheques.

36Ms. Peerzada testified that she does not rely on her parents because she now knows everything about running the business and can operate it on her own. However, they do assist her. Three times a week, her mother opens the store and bakes the goods sold in the bakery. Her mother also makes milkshakes which are ordered in bulk by schools. Her father makes an estimated four deliveries to schools weekly. The milkshakes are prepared during the store’s hours which are 9 a.m. to 7 p.m. Ms. Peerzada stated it is more convenient to prepare these during the day because cleaning the machines used to make them can take up to five hours and that is done after the store closes.

37Ms. Peerzada stated that it would be difficult if her parents could not be present at Shaw’s, particularly with respect to the deliveries her father makes. She thinks her parents should be allowed in the store during working hours because they help her and she needs them there.

38With respect to her application for registration, Ms. Peerzada testified that she could not remember why she said she intended to hire no employees but also stated that her intent at that time was that her father would manage the lottery terminal. She does not remember what happened with his application for registration and did not see the Notice of Proposed Order to refuse it. She also testified she is not aware of the reasons that All-in-One’s registration was refused. She does remember signing the OLG retailer agreement but cannot remember its contents. She stated “it’s probably rules and stuff” and indicated she would review it if she was registered.

Past Conduct of Nadia and Shah Peerzada

39Tony Alfano has been an investigator with the OLG since January 2010. On January 27, 2013, he conducted an investigation at the premises of All-in-One.

40Mr. Alfano testified that the OLG has sports wagering limits of $100 per day per game at a single location. Based on algorithms used in the OLG’s data analysis unit, All-in-One was flagged for its pattern of play and for having high sports wagering sales. Mr. Alfano was assigned to monitor its sports wagering.

41Mr. Alfano explained that he attended All-in-One’s premises and observed the lottery terminal through the store’s front window. While he watched, he was on the telephone with an OLG staff member in the data analysis unit who was monitoring the transactions live. Mr. Alfano testified that he saw two tickets being generated at the terminal which were identified as two $25 Point Spread tickets but he saw no customer. He entered the establishment and spoke to Nadia Peerzada, the person whom he had watched generate the tickets.

42Mr. Alfano testified that he asked to see the tickets but Nadia Peerzada denied having them and said a customer had left with them. She then briefly left the store from its back door and returned with a man she called N. who told Mr. Alfano that he had purchased the two tickets. Mr. Alfano testified that he did not believe this because he had seen no one exiting the store. N. showed Mr. Alfano the two tickets which Mr. Alfano confirmed had the right date and time. Mr. Alfano stated that he did not see Mrs. Peerzada take the tickets when she left the store. Mr. Alfano also inspected the counter area around the lottery terminal but saw no selection slips.

43Mr. Alfano testified that he verified the times of the ticket purchases with the OLG’s data analysis unit when he produced his notes and report. As a result of his investigation, the OLG suspended All-in-One’s sports wagering.

44On January 28, 2013, Mrs. Peerzada telephoned Mr. Alfano and told him that the person who bought the tickets would speak to him. She called this person D. Mr. Alfano testified that the person he spoke to on the telephone had a noticeable accent and was not the same individual whom he had met the day before. He questioned D. about the tickets but D. had no information. The telephone was then passed to Shah Peerzada who became agitated and told Mr. Alfano that he had spoken to D. the day before.

45Mr. Alfano explained that he learned the person who showed him the tickets on January 27th was actually D. and his last name was A. However, Nadia Peerzada had introduced him as N.

46Witness D.A. testified that he works Sundays and fills in during absences at a store located at the same plaza as All-in-One. While he now works primarily at another location, he previously worked full time at the plaza location for a number of years and therefore he knows Nadia and Shah Peerzada.

47D.A. testified that while he does not remember the exact date, Nadia Peerzada came to his store and asked him to tell anyone who came in to ask that he had purchased $50 of lottery tickets. He stated he had never purchased a $50 lottery ticket; he normally buys one Lotto 6/49 and one Lotto Max ticket. Mrs. Peerzada told him it was a type of sport lottery and she gave him the tickets. Then, a “gentleman from the OLG” came in to ask him about the tickets. A few days later, he had a conversation with Shah Peerzada who told him that a police officer might approach him but he had nothing to worry about.

48D.A. testified that he later spoke to a female police officer. He originally told her that he had purchased the tickets because he had $50 “burning a hole in his pocket” but when she asked him details, such as what teams he had bet on, he told her he didn’t know and “came clean”. He told her he had lied to help the Peerzadas. He stated that he was nervous talking to the police and he did not want to get into trouble.

49On cross-examination, D.A. admitted that he had pleaded guilty to a domestic assault charge about seven years ago. Approximately five years ago, he was also charged with selling illegal cigarettes from his vehicle and paid a fine. And, recently, he was charged with the tobacco offence and fined again.

50D.A. stated that he was “truthful and honest” with the police officer. He told her he was a law-abiding citizen and stated that he never steals or is involved in scams. He was nervous talking to the officer and told her that he did not want to go to court and face the Peerzadas. When he agreed to tell the OLG inspector he had purchased the ticket, he never thought that “it would go this far”.

51Detective Constable Jacqueline Dowhaniuk has been an Ontario Provincial Police officer for over 22 years and was assigned to the AGCO in 2013. Officer Dowhaniuk testified that she was asked to investigate All-in-One on January 30, 2013. She was informed that OLG Investigator Tony Alfano had observed Nadia Peerzada producing lottery tickets while customers were not present and that the location was suspended from sports wagering. She conducted background checks on both Nadia and Shah Peerzada, met with Mr. Alfano and spoke to OLG data analysts at the outset of her investigation. The data analysis unit told her that sports wagering represented 76% of the activity at All-in-One when the average in the province is 9%. All-in-One also had the largest sales of Point Spread tickets in the province.

52Officer Dowhaniuk testified that she had difficulty reaching anyone when she first tried to contact Nadia Peerzada. However, on March 4, 2013, she telephoned All-in-One, spoke to Shah Peerzada and left a message asking that Nadia Peerzada call her. On March 5, 2013, she successfully reached Nadia Peerzada and informed her of the investigation. Mrs. Peerzada advised her that she would be contacted by Counsel for the appellant. When Counsel called Officer Dowhaniuk later that evening, she advised him that she was conducting a regulatory investigation related to the OLG “no play at work” policy which forbids insiders at retail locations from playing or redeeming lottery tickets at their own retail location.

53On March 7, 2013, Officer Dowhaniuk went to All-in-One and met Shah Peerzada who advised her that he and Nadia Peerzada were the only persons authorized to use the lottery terminal in the store. She asked him for the camera surveillance footage for January 27, 2013 but he told her it was not available for download. He also told her that the customer who had purchased the tickets had shown them to Mr. Alfano. She also spoke to Mr. Alfano who advised that while he was standing at All-in-One’s window, he had observed Nadia Peerzada print the tickets, that she left the store when he asked to see them and came back with N. from a neighbouring store. Officer Dowhaniuk later learned N. was actually D.A.

54On March 11, 2013, Counsel for the appellant called Officer Dowhaniuk and advised her that he had met with Shah Peerzada and been told that the video equipment in the store had not been working since the beginning of the year.

55Officer Dowhaniuk interviewed Nadia Peerzada on March 13, 2013. Mrs. Peerzada told her that there were a few customers in the store when Mr. Alfano entered. He asked her about the tickets and she told him he could search. She told him a neighbour, D.A., who had entered and exited from the back door, had purchased two $25 Point Spread tickets. Mrs. Peerzada told her the back door was left open because of the baking. She advised Officer Dowhaniuk that D.A. was the last customer served before Mr. Alfano arrived. She brought D.A. into the store but Mr. Alfano did not ask to see the lottery tickets. Officer Dowhaniuk asked Mrs. Peerzada to pass her card to D.A. and ask him to call.

56Officer Dowhaniuk further testified that Nadia Peerzada told her that N., who was a regular customer, had come to the store on January 28, 2013 and spoken to Mr. Alfano on the telephone. She also asked Mrs. Peerzada why sports wagering was so high at the store. Mrs. Peerzada told her that there were no other retailers in the area and a lot of teenagers were customers and they wagered $100 a day. Mrs. Peerzada also advised her that the store’s video cameras had not been working for three to four months.

57Officer Dowhaniuk testified that she interviewed D.A. on June 18, 2013. She located him by going to the store he works at. D.A. first advised her that he purchased $50 of lottery tickets through the back door of All-in-One. He was smoking outside and Nadia Peerzada gave him selection slips. He was not at the terminal when they were purchased but got them five or ten minutes later. He told her he did not show Mr. Alfano the tickets because Mr. Alfano did not ask to see them.

58Officer Dowhaniuk testified that she told D.A. she did not believe him. She formed this opinion because he knew nothing about the Point Spread game. D.A. then apologized for lying and told her he was trying to help the Peerzadas. She did not suggest that he could be charged for lying to her. He then told her that Nadia Peerzada asked him to tell Mr. Alfano that he had purchased the tickets and that he had come through the back door. He agreed because he did not want to get the Peerzadas into trouble. Nadia Peerzada had also told him that she was supposed to give him the officer’s card but had thrown it out. Shah Peerzada told him to say he had bought the tickets but say nothing else. Officer Dowhaniuk testified that she was not concerned that the information D.A. provided to her was unreliable when he changed his story.

59Officer Dowhaniuk testified that she submitted her report on March 28, 2013. In March, 2014, in preparation for a potential hearing, she conducted a CPIC check on Nadia Peerzada and found she was charged with various charges relating to the sale of counterfeit DVDs. She testified that Nadia Peerzada does not have a criminal record and the charges have been removed although she was unable to verify why with Durham Regional Police.

60Officer Dowhaniuk further testified that after Sophia Peerzada submitted her application for registration, she contacted the landlord of the plaza where Shaw’s is located. The landlord advised her that Shaw’s is on a month by month lease and that he only deals with Nadia or Shah Peerzada. Officer Dowhaniuk confirmed that the cheques were issued on the account of Sophia Peerzada’s company. She did not ask the landlord about Sophia Peerzada because her only interest was who was paying the rent.

E. SUBMISSIONS

Registrar’s Submissions

61Ms. Harari submitted that the Tribunal should find that Nadia Peerzada printed lottery tickets with no customer present. Witness D.A. was forthright in his testimony. While he lied to Officer Alfano to help Nadia and Shah Peerzada, he admitted to Officer Dowhaniuk that he had done so. He was honest about his background.

62Ms. Harari further submitted that Sophia Peerzada is dependent on Nadia and Shah Peerzada to operate Shaw’s. She referred me to 1240522 Ontario Inc. (c.o.b. Delta Minivan & Cars Inc.) (Re) [1998] O.C.R.A.T.D. No. 127, a case in which the predecessor to this Tribunal found that the appellant, which was seeking registration as a motor vehicle dealership, should not be registered. In summary, the Tribunal found that the appellant was not being controlled by its owner, but by the owner’s husband who had previously had his registration as a motor vehicle dealer revoked.

63Ms. Harari submitted that the appellant is not entitled to registration because, while the Registrar has no concerns with respect to the conduct of Sophia Peerzada, she is not prepared to exclude Nadia and Shah Peerzada from the appellant’s operations. The past conduct of Nadia and Shah Peerzada and Sophia Peerzada’s reliance on them to operate Shaw’s provides reason to believe that Shaw’s will not act in accordance with law and with integrity, honesty and in the public interest.

Appellant’s Submissions

64Mr. Yeghoyan submitted that there is no evidence of any wrongdoing by Sophia Peerzada. Nadia and Shah Peerzada are not the operating mind of Shaw’s. Rather, Shaw’s is a traditional family business which Sophia Peerzada’s parents support. Mr. Yeghoyan submitted that Nadia and Shah Peerzada are agents of Sophia Peerzada and agents are not included in the definition of “persons interested”. There is no legal basis to find they are persons interested in the appellant’s business. He further submitted that including family members in the definition of “persons interested” would unduly prejudice family businesses.

65Mr. Yeghoyan further submitted that Ms. Peerzada was honest about her parents’ role in the business and has a plan to ensure they are not involved with the lottery terminal. She would not jeopardize her registration by allowing them access to it. Shaw’s is not a traditional variety store; it comprises several businesses and Nadia and Shah Peerzada are involved in the bakery, dairy bar and garden centre. There is no reason to believe that Sophia Peerzada will not act in accordance with the law.

66Finally, Mr. Yeghoyan submitted that D.A. was not a credible witness. Further, Mr. Alfano’s testimony was inconsistent. The Tribunal should not rely on these witnesses in assessing the past conduct of Nadia and Shah Peerzada.

F. ANALYSIS

Are Nadia and Shah Peerzada interested persons?

67The first issue to be determined is whether Nadia and Shah Peerzada are interested persons as set out in section 8 of the Act. Do they have a beneficial interest in Shaw’s; do they exercise control over it, either directly or indirectly; or, have they provided financing, either directly or indirectly?

68On the balance of probabilities, the evidence persuades me that Shaw’s was incorporated and All-in-One was purchased by Sophia Peerzada as a means to enable the Peerzada family to obtain an OLG lottery terminal.

69The Final Order to refuse the registration of All-in-One, Nadia Peerzada’s business, was issued on April 24, 2014. Sophia Peerzada incorporated Shaw’s on June 2, 2014. The Agreement of Purchase and Sale for All-in-One is dated June 30, 2014. However, this date does not coincide with Sophia Peerzada’s testimony that she decided to take over the business in either late 2013 or early 2014. I note that she was still a student then and, according to the Personal Disclosure form she submitted to the AGCO, she worked as a part time sales associate at a large retailer between August, 2014 and August, 2015. I find it improbable that she was able to attend school, hold a part time job and manage Shaw’s at the same time.

70The Agreement of Purchase and Sale was not signed by Nadia and Sophia Peerzada until January 11, 2016. This raises questions with respect to when the business was actually purchased and therefore when or if control was transferred to Sophia Peerzada. While Ms. Peerzada testified that she paid her mother approximately 50% of the purchase price in cash, there is no evidence as to when this payment was made. Ms. Peerzada also testified that she relied on revenues from the business to pay the balance owing. This suggests that Nadia Peerzada had a financial interest in Shaw’s until all payments were made, although I note that the date of final payment is also unknown. The questions about financing of the business were asked on cross-examination. However, given the issues in this matter, I question that Ms. Peerzada did not submit any documents to support the independence of her ownership of the appellant.

71The AGCO received Shaw’s application for registration as a seller on November 13, 2015. I note that while the corporate record submitted by the Registrar indicates that “Shaw’s A/1 Bakery & Flowers” was registered as a business name on February 4, 2015, Ms. Peerzada wrote the business’ operating name as “The Bakery Flowers” on the application. The AGCO received a correction from Ms. Peerzada on December 10, 2015. Ms. Peerzada testified that she “probably made a mistake”. I would expect someone in control of a business to know the name it was operating under.

72On Shaw’s application for registration, Ms. Peerzada indicated that she did not intend to hire any employees. However, in her February 18, 2016 e-mail to AGCO employee A.D., Ms. Peerzada confirmed that her father, Shah Peerzada, would be operating the lottery terminal. The Deputy Registrar issued a Notice of Proposed Order to refuse Mr. Peerzada’s registration on February 13, 2017. Ms. Peerzada testified that she does not remember what happened to her father’s application. I find it improbable that someone operating a business seeking registration as a lottery retailer would not be aware of the outcome of an application which was central to her stated plans. Therefore I must question whether the submission of this application was done at her or her father’s behest.

73Ms. Peerzada’s correspondence also gives me reason to question her control of Shaw’s. In her Notice of Appeal, she wrote “My parents have been running this store for about 20 years, I won’t be able to run it successfully without their presence. I believe they should be forgiven and we should get our lottery back”. In her February 18, 2016 e-mail to A.D., she wrote “So if you can please try to speed up the process of the terminal because we’ve been waiting a lot longer than we should’ve been”.

74I acknowledge that Sophia Peerzada might well not separate herself from her family when referring to a family business in correspondence. However, in her April 25, 2016 e-mail to A.D., she wrote “My family and I are coming up with an agreement and was hoping if you can reconsider the agreement you’ve sent us, because our small business depends on the Lottery Terminal and without it we are very slow. It has been 3 years without it and we’ve been waiting for a long time now”. The fact that she refers to her family as being party to the consideration of an agreement further persuades me that she is not in sole control of the appellant. Further, I note that as of April 25, 2016, Ms. Peerzada herself had only been waiting since November 15, 2015, the date she submitted the appellant’s application for registration.

75When asked about her responsibilities at the store, Ms. Peerzada did not indicate that she is responsible for managerial roles such as operational or financial decision-making. Rather she stated that she operates the cash and does ordering. When prompted, she added that she does e-mails and cleans the store. She provided no details about either the ordering or e-mails to indicate the responsibility level of these duties.

76Further, while Ms. Peerzada indicated her parents were not always present at the store because of their other interests, she somewhat inconsistently indicated that Nadia Peerzada needed to be at the store to bake three times a week and Shah Peerzada needed to be present to make deliveries. And, while she testified that her parents are now employees, she also testified that she does not set their hours of work and they are free to come and go as they wish. This further indicates that decision-making or control is not solely Ms. Peerzada’s.

Finding:

77Section 8(b) of the Act states a person is deemed to be interested in another person if “the first person exercises, or may exercise in the opinion of the Registrar based on reasonable grounds, control either directly or indirectly over the other person’s business”. I reject Mr. Yeghoyan’s submission that the interpretation of “person interested” excludes agents or does not apply to family members; section 8 of the Act includes no exclusions in the interpretation of “person interested”.

78There is no evidence to support that that the appellant is operating any differently now than it might have when it was owned by Ms. Peerzada’s mother. The only concrete change Ms. Peerzada spoke to was the renovation of the front counter. Based on the evidence and analysis set out above, there are reasonable grounds to conclude that Nadia and Shah Peerzada exercise control over Sophia Peerzada’s business. Therefore I find that they are “interested persons” as set out in the Act.

Past Conduct of Nadia and/or Shah Peerzada

79I accept the evidence of investigator Tony Alfano that he witnessed Nadia Peerzada print two lottery tickets without a customer present, contrary to OLG policy. I acknowledge that Mr. Alfano’s testimony was not always clear and that he appeared confused when he referred to the names of D. and N. However, Mr. Alfano was very clear that he was located outside the front window of All-in-One, on the phone with live monitoring by the OLG’s data analysis unit, when he saw the tickets printed. He was equally clear that he then entered the store and Mrs. Peerzada did not show him the tickets when asked to do so. Rather, she left the store and returned with a person who was subsequently identified to be D.A. who had the tickets, the time and date of which Mr. Alfano testified he verified, in his possession. I note that Mr. Alfano testified he found no selection slips when he searched the counter area. If a customer had just given Nadia Peerzada selection slips for ticket purchases, it is reasonable to assume they would be found at the counter area.

80I also accept D.A.’s testimony that Nadia Peerzada asked him to tell the investigator that he had purchased the tickets and that Shah Peerzada later asked him to say the same thing to Officer Dowhaniuk. While there was some suggestion that D.A. might have been intimidated when he changed his initial story during his interview with Officer Dowhaniuk, I find it more likely that he admitted the truth when he was unable to sustain the lie that he had purchased the tickets. Both he and Officer Dowhaniuk testified that he changed his story when she said “I don’t believe you” after he was unable to answer questions about the sports lottery.

81I acknowledge that D.A. appeared uncomfortable during his testimony at this Tribunal and could not answer all questions, such as the date he spoke to Mr. Alfano. His testimony was also inconsistent with Mr. Alfano’s with respect to whether D.A. went to All-in-One with the tickets or whether he met Mr. Alfano in his own store. However, I note D.A. did not take notes and was testifying about events that took place five years ago solely from memory. I also acknowledge that D.A. admitted to selling cigarettes illegally but described himself as a “law abiding citizen”. I note, however, that he qualified this statement by saying that he never steals or is involved in scams, indicating to me that he has a hierarchy of what he believes to be illegal. However, D.A.’s testimony with respect to his interview with Officer Dowhaniuk was consistent with the officer’s. D.A. was quite clear that he never spends $50 on lottery tickets and was specific that he only buys 1 Lotto 6/49 and 1 Lotto Max ticket, reinforcing his account that he did not purchase the tickets Mr. Alfano saw Nadia Peerzada produce.

82I note that Officer Dowhaniuk testified that the information provided to her by the OLG was that All-In-One had the highest sales of Point Spread tickets in the province. I find the explanation that Nadia Peerzada’s gave her, that teenagers spend $100 each time they purchase, to be highly unlikely. Nor do I find it plausible that the skewed sales result from being the only retailer in the area. The evidence before me is with respect to one incident only. However, these statistics raise questions with respect to the potential extent of irregular Point Spread sales.

Finding:

83Based on the evidence, on the balance of probabilities, I find that Nadia Peerzada printed two lottery tickets without a customer present, contrary to the OLG’s “play at work” policy. I also find that both Nadia and Shah Peerzada counselled D.A. to lie to both OLG investigator Tony Alfano and O.P.P. Officer Jacqueline Dowhaniuk.

G. CONCLUSION

84The question before me is whether, based on the past conduct of persons interested in the officers and directors of the appellant, there are reasonable grounds to believe that Shaw’s will not act as a supplier in accordance with law and with integrity and honesty and in the public interest. The standard to be applied in making this determination is set out in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc. (Famous Flesh Gordon’s), 2013 ONCA 157:

[19] As applied to this case, s. 6(2)(d) of the Act requires 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 the 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 makes it more likely than not that he will not carry on business as required.

85I have found that Nadia and Shah Peerzada are persons interested in Nadia Peerzada, the officer and director of Shaw’s. On January 27, 2013, Nadia Peerzada printed two $25 lottery tickets with no customer present, contrary to OLG policy. I have also found that she asked D.A. to lie to OLG investigator Alfano about this incident and that Shah Peerzada counselled D.A. to lie to the police. This conduct demonstrates a lack of respect for the law and a lack of honesty and integrity. Therefore, I find that there are reasonable grounds to believe that Shaw’s will not act as a supplier in accordance with law and with integrity and honesty and in the public interest in accordance with s. 10(b)(ii) of the Act.

86There are no allegations before me with respect to the conduct of Sophia Peerzada. The Deputy Registrar offered registration to the appellant with terms which Ms. Peerzada refused because she was not willing to exclude her parents from Shaw’s premises during business hours. During this hearing, Ms. Peerzada made it clear that while she was prepared to put measures in place to exclude Nadia and Shah Peerzada from the lottery terminal area were she to be registered; she still was not prepared to agree to the terms offered by the Registrar. The past conduct of Nadia and Shah Peerzada and the evidence of their ongoing control of the business is such that I cannot consider registration with conditions that would allow them on the appellant’s premises with potential access to the lottery terminal during business hours. Therefore, I find that the appellant’s registration should be refused.

ORDER

87Pursuant to the authority set out in section 13(8) of the Act, I confirm the Proposed Order of the Deputy Registrar dated February 13, 2017 to refuse the registration of 2421185 Ontario Inc. o/a Shaw’s A/1 Bakery & Flowers as a gaming supplier in the class of seller.