Appeal from the Notice of Proposal to Refuse to Remove Condition from a Licence issued by the Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996 under the Liquor Licence Act
Between:
9308423 Canada Inc. o/a Atari
Appellant
and
Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act, 1996
Respondent
DECISION AND ORDER
Order By: Marisa Victor, Member
Appearances:
For the Appellant: Garett Schromm, counsel For the Respondent: Rena Khan, counsel
Place and date of hearing: Ottawa, ON January 30, 2019
REASONS FOR DECISION AND ORDER
Overview
1The appellant appeals the Notice of Proposal dated July 12, 2018 (the Proposal) issued under the Liquor Licence Act, R.S.O. 1990, c. L.19 (the Act). The appellant applied to have certain conditions on its existing liquor licence removed. The Proposal was issued by the Registrar, Alcohol, Cannabis and Gaming Regulation and Public Protection Act (the Registrar).1 It refused to remove conditions from the appellant’s licence LSL803860 for the premises of 297 Dalhousie Street, Ottawa because there was insufficient evidence to establish that there has been a change of circumstances that would warrant removal of the conditions.
2The conditions the appellant requests be removed are:
a. There shall be no live or amplified music on the roof top patio permitted after 9:30 pm daily; and
b. The sale and service of alcohol beverages on the roof top patio shall cease each night from Sunday through Thursday at 10:00pm and Friday and Saturday at 11:30 pm. On the Statutory holiday of July 1, the sale and service shall cease at 11:30 p.m.
3In 2014, the original application for a liquor sales licence resulted in objections from members of the public. The objectors took issue with the density of establishments in the Byward Market, and problems with noise, rowdiness, misbehaviour and safety. In 2014, the Licence Appeal Tribunal (Tribunal) ruled that those concerns were mostly speculative and not proven on a balance of probabilities (the 2014 Decision).2 Nevertheless, the Tribunal placed conditions on the licence due to the proximity of the licensee to residential units.
4The appellant sought removal of the conditions by way of a written application under s. 14(2) of the Act. On July 5, 2018, the Tribunal directed the Registrar to issue the Proposal in accordance with s. 21(1)(8) of the Act (the 2018 Decision). The appellant appealed that Proposal leading to this full hearing of the merits.
5No objections were received by the Registrar following the application for removal of conditions. The Registrar took no position with regard to this appeal.
6The Tribunal heard evidence from the appellant only as there were no parties who objected to the removal of the conditions.
7I concluded that there has been a change of circumstances that warrants the removal of the conditions.
ISSUE
8The issue to be decided is whether there is sufficient evidence to establish that there has been a change of circumstances that would warrant removal of the conditions.
9In order to determine the issue, I must ask the following questions:
a. Has there been a change in in circumstances?
i. Has there been a change in ownership or manner of operating?
ii. Has there been a change in the competitive conditions in the neighbourhood?
iii. Has there been a change in community support?
b. If there has been a change in the circumstances, should the Tribunal exercise its discretion to remove/change the licence conditions?
HAS THERE BEEN A CHANGE IN CIRCUMSTANCES?
10A change of circumstance is a pre-requisite for the removal of conditions under the Act.
11The appellant states that it has three evidential grounds that establish a change of circumstances justifying the removal of the liquor licence conditions:
a. There has been a change in ownership and manner of operating;
b. There has been a change in the competitive conditions in the neighbourhood; and
c. There has been a change in community support.
CHANGE IN OWNERSHIP AND MANNER OF OPERATING
EVIDENCE
12The appellant called Mr. Aydin Kharaghani, principle of the appellant, as witness.
13Mr. Kharaghani testified that he purchased the liquor licence from the original owner who had operated an Italian restaurant under the name Sopra. The previous owner also operated a nightclub called Sotto located in the basement of the same building where Atari is now operating. That nightclub is no longer in operation. Mr. Kharaghani has no affiliation with the previous owner.
14Mr. Kharaghani stated that he opened Atari on Canada Day in 2015. He was aware of the conditions under appeal when he purchased the licence. The business model is that of a fine dining restaurant specializing in tartare and handcrafted cocktails. The appellant entered into evidence a summer menu and cocktail menu.
15Mr. Kharaghani testified that his business model was different from that of Sopra. In terms of physical differences, he stated that the previous owner’s concept was that patrons would start out in the restaurant and then it would turn into a lounge connected to the nightclub in the basement. There was a physical connection between Sopra and Sotto which no longer exists. Mr. Kharaghani stated that he took steps to remove the connection between the two locations due to noise concerns.
16He also built a sound proof wall and pergola on the rooftop patio which had an esthetic and soundproofing effect. The appellant also changed the sound system in the restaurant, which previously had two large speakers which could produce sound for a 400-person environment. The current sound system has more speakers, but they are much smaller and are intended to operate at a lower volume for ambient sound. The appellant also added seating on the rooftop patio.
ANALYSIS
17In the Troubadour Bar Inc. decision,3 the Board of the Alcohol and Gaming Commission of Ontario held that the change in circumstances need not be dramatic or of severe consequence. Although the decision does not bind me, I find the analysis helpful. In that case, applicant had also inherited conditions of licence from a previous owner. The applicant relied on the change in the way the business was operated to establish a change in circumstance. The applicant provided evidence that the previous licensee did not conduct its business to the same high degree as the appellant.
18The appellant has provided evidence of a change in the business model, a change of sound system and a change in the physical layout of the premises. These are sufficient to comply with the test as set out in Troubadour. In particular, the appellant has taken steps to separate itself from what was a nightclub, and added infrastructure to lower sound (the wall, pergola and smaller speakers).
HAS THERE BEEN A CHANGE IN THE COMPETITIVE CONDITIONS IN THE NEIGHBOURHOOD?
EVIDENCE
19Mr. Kharaghani testified about the neighbourhood and the competitive environment. He noted trends including an increase in the older demographic who were “foodies” interested in high end cuisine and different cultural foods. When he started Atari, there wasn’t as much food competition. Now there is a shift towards night eating and an increase in patios in the summer months.
20Mr. Kharaghani stated that the conditions on Atari’s liquor licence cripple it in, comparison to its competition. Other similar establishments can serve food and play music until 2 am. He stated it is difficult to transition people from the patio to indoors. Instead patrons move to other locations where the patio is open later. He also stated that the business model in the Byward Market is focused on maximizing summer revenue.
21The appellant also called Mr. Ainslie Dunstone, a regulatory consultant, who testified via written affidavit subject to viva voce cross-examination. His affidavit evidence established that a few establishments in the Byward Market with patios or rooftop decks held liquor licences that were unencumbered by conditions. Some of these licences were issued after the initial Sopra licence was issued.
ANALYSIS
22The unchallenged evidence from the appellant establishes that there has been some change in the Byward Market towards more high-end food establishments serving an older clientele. I accept that the area has a very competitive environment, especially in the summer months. I also find that some other establishments are able to provide later service on their patios due to the lack of conditions on their licence.
HAS THERE BEEN A CHANGE IN COMMUNITY SUPPORT?
EVIDENCE
23Mr. Kharaghani testified that when he purchased the property, he did not know the relationship between the previous owner and local neighbours was poor. There were a significant number of objectors to the original licence application, he states, due to the previous owner’s poor relationship with the community stemming from the way the adjoining nightclub was operated.
24Mr. Kharaghani states that in 2016, soon after he opened Atari, he applied to remove the conditions on the licence. He voluntarily withdrew his request at that time to spend more time winning over clientele and neighbours.
25Mr. Kharaghani also submitted that the fact that no objectors have come forward, even though public placards were displayed announcing the proposed changes, supports his case. He stated that he has had no contact from the original objectors. Further, the appellant produced five pages of letters of support including letters from residents at 144 Clarence St. and 119 Clarence St. which are the closest residential buildings to Atari. The letters attest that they are pleased with the new ownership, the way the business is run and the menu offerings.
26Mr. Kharaghani states that he has a record of compliance with his liquor licences, including the one he holds for Atari. Atari has had no bylaw convictions or health concerns reported. There is one pending investigation into the business related to when a bus boy forgot to turn off the music on the patio after it had been cleared and closed. This resulted in increased staff education. The appellant does not know if anything further will come of that one incident.
27Mr. Kharaghani stated he understood why conditions were placed on the licence in the first place, but states he has “won over the neighbourhood.” Further, the conditions on the licence have impacted Atari’s ability to serve neighbourhood needs, including recently being unable to host a nearby resident’s birthday party on the patio due to the restrictions on the licence.
28The appellant submitted that a licence without conditions is still subject to municipal bylaws which require service of alcohol on patios to cease at 10 pm and no noise on patios after 11pm.
ANALYSIS
29The appellant has shown that he has made an effort to gain the support of the community. Some of that is evidenced by the letters of support from five nearby residents, who would be most impacted by noise. The fact that the previous objectors have not communicated with the appellant is a neutral factor. It is not known whether they were made aware of the application, though a public placard was posted. However, I find that the appellant has established some evidence of change in community support.
CONCLUSION REGARDING CHANGE IN CIRCUMSTANCES
30Considering the totality of the evidence of changes noted above, including the operation of the establishment, the change to the competitive environment and the change in community support, the appellant has established that there has been a change in circumstances.
31I can now move on to whether the Tribunal should exercise its discretion to remove of the conditions on the licence.
If there has been a change in the circumstances, should the Tribunal exercise its discretion to remove/change the licence conditions
32When it imposed the conditions in 2014, s. 23(12) of the Act permitted the Tribunal to attach any conditions that would further the purposes of the Act. In deciding whether to remove the conditions, the Tribunal must determine whether the change in circumstances is such that the conditions no longer further the purposes of the Act.
33It is clear from the 2014 Decision that the primary concern meant to be addressed by the conditions was noise. In the case before me, the evidence is that the changes to the appellant’s establishment all address noise. These include: the closing of the nightclub, the closing of the connection between the restaurant and the nightclub, the change in the physical structure and the changes in the speaker system. In addition, the appellant has established that there has been a change in the competitive environment such that other locations have outdoor or patio licenses that do not have conditions. The appellant has lost business to some of these establishments. Further, there are some local residents who support the lifting of conditions and no evidence of community opposition was presented. I find that a change in circumstances means that the conditions currently imposed no longer further the purpose of the Act.
34I find that the Tribunal should use its discretion to remove the appealed conditions on the licence.
ORDER
35I direct the Registrar to not carry out its proposal to refuse to remove the licence conditions.
LICENCE APPEAL TRIBUNAL
Marisa Victor, Adjudicator
Released: April 15, 2019
Footnotes
- I note that the when the proposal was issued, the Registrar was titled the Registrar of Alcohol, Gaming and Racing.
- 9014 v. Registrar of Alcohol and Gaming, 2014 CanLII 79260.
- Registrar, Alcohol and Gaming Commission of Ontario v. Troubadour Bar Inc. operating as Troubadour Bar (The), 2008 CanLII 52594 (ON AGC)